G.R. No.

96405 June 26, 1996

BALDOMERO INCIONG, JR., petitioner,
vs.
COURT OF APPEALS and PHILIPPINE BANK OF COMMUNICATIONS, respondents.

ROMERO, J.:p
This is a petition for review on certiorari of the decision of the Court of Appeals affirming that of the Regional Trial Court
of Misamis Oriental, Branch 18, 1 which disposed of Civil Case No. 10507 for collection of a sum of money and
damages, as follows:
WHEREFORE, defendant BALDOMERO L. INCIONG, JR. is adjudged solidarily liable and ordered
to pay to the plaintiff Philippine Bank of Communications, Cagayan de Oro City, the amount of
FIFTY THOUSAND PESOS (P50,000.00), with interest thereon from May 5, 1983 at 16% per
annum until fully paid; and 6% per annum on the total amount due, as liquidated damages or
penalty from May 5, 1983 until fully paid; plus 10% of the total amount due for expenses of litigation
and attorney's fees; and to pay the costs.
The counterclaim, as well as the cross claim, are dismissed for lack of merit.
SO ORDERED.
Petitioner's liability resulted from the promissory note in the amount of P50,000.00 which he signed with Rene C. Naybe
and Gregorio D. Pantanosas on February 3, 1983, holding themselves jointly and severally liable to private respondent
Philippine Bank of Communications, Cagayan de Oro City branch. The promissory note was due on May 5, 1983.
Said due date expired without the promissors having paid their obligation. Consequently, on November 14, 1983 and on
June 8, 1984, private respondent sent petitioner telegrams demanding payment thereof. 2 On December 11, 1984
private respondent also sent by registered mail a final letter of demand to Rene C. Naybe. Since both obligors did not
respond to the demands made, private respondent filed on January 24, 1986 a complaint for collection of the sum of
P50,000.00 against the three obligors.
On November 25, 1986, the complaint was dismissed for failure of the plaintiff to prosecute the case. However, on
January 9, 1987, the lower court reconsidered the dismissal order and required the sheriff to serve the summonses. On
January 27, 1987, the lower court dismissed the case against defendant Pantanosas as prayed for by the private
respondent herein. Meanwhile, only the summons addressed to petitioner was served as the sheriff learned that
defendant Naybe had gone to Saudi Arabia.
In his answer, petitioner alleged that sometime in January 1983, he was approached by his friend, Rudy Campos, who
told him that he was a partner of Pio Tio, the branch manager of private respondent in Cagayan de Oro City, in the
falcata logs operation business. Campos also intimated to him that Rene C. Naybe was interested in the business and
would contribute a chainsaw to the venture. He added that, although Naybe had no money to buy the equipment, Pio
Tio had assured Naybe of the approval of a loan he would make with private respondent. Campos then persuaded
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petitioner to act as a "co-maker" in the said loan. Petitioner allegedly acceded but with the understanding that he would
only be a co-maker for the loan of P50,000.00.
Petitioner alleged further that five (5) copies of a blank promissory note were brought to him by Campos at his office. He
affixed his signature thereto but in one copy, he indicated that he bound himself only for the amount of P5,000.00. Thus,
it was by trickery, fraud and misrepresentation that he was made liable for the amount of P50,000.00.
In the aforementioned decision of the lower court, it noted that the typewritten figure "-- 50,000 --" clearly appears
directly below the admitted signature of the petitioner in the promissory note. 3 Hence, the latter's uncorroborated
testimony on his limited liability cannot prevail over the presumed regularity and fairness of the transaction, under Sec. 5
(q) of Rule 131. The lower court added that it was "rather odd" for petitioner to have indicated in a copy and not in the
original, of the promissory note, his supposed obligation in the amount of P5,000.00 only. Finally, the lower court held
that, even granting that said limited amount had actually been agreed upon, the same would have been merely
collateral between him and Naybe and, therefore, not binding upon the private respondent as creditor-bank.
The lower court also noted that petitioner was a holder of a Bachelor of Laws degree and a labor consultant who was
supposed to take due care of his concerns, and that, on the witness stand, Pio Tio denied having participated in the
alleged business venture although he knew for a fact that the falcata logs operation was encouraged by the bank for its
export potential.
Petitioner appealed the said decision to the Court of Appeals which, in its decision of August 31, 1990, affirmed that of
the lower court. His motion for reconsideration of the said decision having been denied, he filed the instant petition for
review on certiorari.
On February 6, 1991, the Court denied the petition for failure of petitioner to comply with the Rules of Court and
paragraph 2 of Circular
No. 1-88, and to sufficiently show that respondent court had committed any reversible error in its questioned
decision. 4 His motion for the reconsideration of the denial of his petition was likewise denied with finality in the
Resolution of April 24, 1991. 5 Thereafter, petitioner filed a motion for leave to file a second motion for reconsideration
which, in the Resolution of May 27, 1991, the Court denied. In the same Resolution, the Court ordered the entry of
judgment in this case. 6
Unfazed, petitioner filed a notion for leave to file a motion for clarification. In the latter motion, he asserted that he had
attached Registry Receipt No. 3268 to page 14 of the petition in compliance with Circular No. 1-88. Thus, on August 7,
1991, the Court granted his prayer that his petition be given due course and reinstated the same. 7
Nonetheless, we find the petition unmeritorious.
Annexed to the petition is a copy of an affidavit executed on May 3, 1988, or after the rendition of the decision of the
lower court, by Gregorio Pantanosas, Jr., an MTCC judge and petitioner's co-maker in the promissory note. It supports
petitioner's allegation that they were induced to sign the promissory note on the belief that it was only for P5,000.00,
adding that it was Campos who caused the amount of the loan to be increased to P50,000.00.
The affidavit is clearly intended to buttress petitioner's contention in the instant petition that the Court of Appeals should
have declared the promissory note null and void on the following grounds: (a) the promissory note was signed in the
office of Judge Pantanosas, outside the premises of the bank; (b) the loan was incurred for the purpose of buying a
second-hand chainsaw which cost only P5,000.00; (c) even a new chainsaw would cost only P27,500.00; (d) the loan
was not approved by the board or credit committee which was the practice, as it exceeded P5,000.00; (e) the loan had

no collateral; (f) petitioner and Judge Pantanosas were not present at the time the loan was released in contravention of
the bank practice, and (g) notices of default are sent simultaneously and separately but no notice was validly sent to
him. 8 Finally, petitioner contends that in signing the promissory note, his consent was vitiated by fraud as, contrary to
their agreement that the loan was only for the amount of P5,000.00, the promissory note stated the amount of
P50,000.00.
The above-stated points are clearly factual. Petitioner is to be reminded of the basic rule that this Court is not a trier of
facts. Having lost the chance to fully ventilate his factual claims below, petitioner may no longer be accorded the same
opportunity in the absence of grave abuse of discretion on the part of the court below. Had he presented Judge
Pantanosas affidavit before the lower court, it would have strengthened his claim that the promissory note did not reflect
the correct amount of the loan.

Ninety one (91) days after date, for value received, I/we, JOINTLY and SEVERALLY promise to
pay to the PHILIPPINE BANK OF COMMUNICATIONS at its office in the City of Cagayan de Oro,
Philippines the sum of FIFTY THOUSAND ONLY (P50,000.00) Pesos, Philippine Currency,
together with interest . . . at the rate of SIXTEEN (16) per cent per annum until fully paid.
A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation, and each creditor
is entitled to demand the whole obligation. 17 on the other hand, Article 2047 of the Civil Code states:
By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of
the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3,
Title I of this Book shall be observed. In such a case the contract is called a suretyship. (Emphasis
supplied.)

Nor is there merit in petitioner's assertion that since the promissory note "is not a public deed with the formalities
prescribed by law but . . . a mere commercial paper which does not bear the signature of . . . attesting witnesses," parol
evidence may "overcome" the contents of the promissory note. 9 The first paragraph of the parol evidence rule10 states:
When the terms of an agreement have been reduced to writing, it is considered as containing all
the terms agreed upon and there can be, between the parties and their successors in interest, no
evidence of such terms other than the contents of the written agreement.

While a guarantor may bind himself solidarily with the principal debtor, the liability of a guarantor is different
from that of a solidary debtor. Thus, Tolentino explains:
A guarantor who binds himself in solidum with the principal debtor under the provisions of the
second paragraph does not become a solidary co-debtor to all intents and purposes. There is a
difference between a solidary co-debtor and a fiador in solidum (surety). The latter, outside of the
liability he assumes to pay the debt before the property of the principal debtor has been exhausted,
retains all the other rights, actions and benefits which pertain to him by reason of the fiansa; while
a solidary co-debtor has no other rights than those bestowed upon him in Section 4, Chapter 3,
Title I, Book IV of the Civil Code. 18

Clearly, the rule does not specify that the written agreement be a public document.
What is required is that the agreement be in writing as the rule is in fact founded on "long experience that written
evidence is so much more certain and accurate than that which rests in fleeting memory only, that it would be unsafe,
when parties have expressed the terms of their contract in writing, to admit weaker evidence to control and vary the
stronger and to show that the
parties intended a different contract from that expressed in the writing signed by them." 11 Thus, for the parol evidence
rule to apply, a written contract need not be in any particular form, or be signed by both parties. 12 As a general rule,
bills, notes and other instruments of a similar nature are not subject to be varied or contradicted by parol or extrinsic
evidence. 13
By alleging fraud in his answer, 14 petitioner was actually in the right direction towards proving that he and his co-makers
agreed to a loan of P5,000.00 only considering that, where a parol contemporaneous agreement was the inducing and
moving cause of the written contract, it may be shown by parol evidence. 15 However, fraud must be established by clear
and convincing evidence, mere preponderance of evidence, not even being adequate. 16Petitioner's attempt to prove
fraud must, therefore, fail as it was evidenced only by his own uncorroborated and, expectedly, self-serving testimony.
Petitioner also argues that the dismissal of the complaint against Naybe, the principal debtor, and against Pantanosas,
his co-maker, constituted a release of his obligation, especially because the dismissal of the case against Pantanosas
was upon the motion of private respondent itself. He cites as basis for his argument, Article 2080 of the Civil Code which
provides that:
The guarantors, even though they be solidary, are released from their obligation whenever by
some act of the creditor, they cannot be subrogated to the rights, mortgages, and preferences of
the latter.
It is to be noted, however, that petitioner signed the promissory note as a solidary co-maker and not as a guarantor. This
is patent even from the first sentence of the promissory note which states as follows:
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Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint and several obligations. Under Art. 1207
thereof, when there are two or more debtors in one and the same obligation, the presumption is that the obligation is
joint so that each of the debtors is liable only for a proportionate part of the debt. There is a solidary liability only when
the obligation expressly so states, when the law so provides or when the nature of the obligation so requires. 19
Because the promissory note involved in this case expressly states that the three signatories therein are jointly and
severally liable, any one, some or all of them may be proceeded against for the entire obligation. 20 The choice is left to
the solidary creditor to determine against whom he will enforce collection. 21 Consequently, the dismissal of the case
against Judge Pontanosas may not be deemed as having discharged petitioner from liability as well. As regards Naybe,
suffice it to say that the court never acquired jurisdiction over him. Petitioner, therefore, may only have recourse against
his co-makers, as provided by law.
WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the questioned decision of the Court of
Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.

(ii) Plaintiff will submit to the defendants the approved plan for the segregation;
G.R. No. 107372 January 23, 1997
RAFAEL S. ORTAES, petitioner,
vs.
THE COURT OF APPEALS, OSCAR INOCENTES AND ASUNCION LLANES INOCENTES, respondents.

(iii) Plaintiff will put up a strong wall between his property and that of defendants' lot to segregate
his right of way;
(iv) Plaintiff will pay the capital gains tax and all other expenses that may be incurred by reason of
sale. . .

RESOLUTION
During trial, private respondent Oscar Inocentes, a former judge, orally testified that the sale was subject to the above
conditions, 7 although such conditions were not incorporated in the deeds of sale. Despite petitioner's timely objections
on the ground that the introduction of said oral conditions was barred by the parol evidence rule, the lower court
nonetheless, admitted them and eventually dismissed the complaint as well as the counterclaim. On appeal, the Court
of Appeals (CA) affirmed the court a quo. Hence, this petition.

FRANCISCO, J.:
On September 30, 1982, private respondents sold to petitioner two (2) parcels of registered land in Quezon City for a
consideration of P35,000.00 and P20,000.00, respectively. The first deed of absolute sale covering Transfer Certificate
of Title (TCT) No. 258628 provides in part:
That for and in consideration of the sum of THIRTY FIVE THOUSAND (P35,000.00) PESOS,
receipt of which in full is hereby acknowledged, we have sold, transferred and conveyed, as we
hereby sell, transfer and convey, that subdivided portion of the property covered by TCT No.
258628 known as Lot No. 684-G-1-B-2 in favor of RAFAEL S. ORTAEZ, of legal age, Filipino,
whose marriage is under a regime of complete separation of property, and a resident of 942 Aurora
Blvd., Quezon City, his heirs or assigns. 1
while the second deed of absolute sale covering TCT. No. 243273 provides:
That for and in consideration of the sum of TWENTY THOUSAND (P20,000.00) PESOS receipt of
which in full is hereby acknowledged, we have sold, transferred and conveyed, as we hereby sell,
transfer and convey, that consolidated-subdivided portion of the property covered by TCT No.
243273 known as Lot No. 5 in favor of RAFAEL S. ORTANEZ, of legal age, Filipino, whose
marriage is under a regime of complete separation of property, and a resident of 942 Aurora Blvd.,
Cubao, Quezon City his heirs or assigns. 2
Private respondents received the payments for the above-mentioned lots, but failed to deliver the titles to petitioner. On
April 9, 1990 the latter demanded from the former the delivery of said titles. 3 Private respondents, however, refused on
the ground that the title of the first lot is in the possession of another person, 4 and petitioner's acquisition of the title of
the other lot is subject to certain conditions.
Offshoot, petitioner sued private respondents for specific performance before the RTC. In their answer with counterclaim
private respondents merely alleged the existence of the following oral conditions 5 which were never reflected in the
deeds of sale: 6
3.3.2 Title to the other property (TCT No. 243273) remains with the defendants (private
respondents) until plaintiff (petitioner) shows proof that all the following requirements have been
met:
(i) Plaintiff will cause the segregation of his right of way amounting to 398 sq. m.;
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We are tasked to resolve the issue on the admissibility of parol evidence to establish the alleged oral conditionsprecedent to a contract of sale, when the deeds of sale are silent on such conditions.
The parol evidence herein introduced is inadmissible. First, private respondents' oral testimony on the alleged
conditions, coming from a party who has an interest in the outcome of the case, depending exclusively on human
memory, is not as reliable as written or documentary evidence. 8 Spoken words could be notoriously unreliable unlike a
written contract which speaks of a uniform language. 9 Thus, under the general rule in Section 9 of Rule 130 10of the
Rules of Court, when the terms of an agreement were reduced to writing, as in this case, it is deemed to contain all the
terms agreed upon and no evidence of such terms can be admitted other than the contents thereof. 11 Considering that
the written deeds of sale were the only repository of the truth, whatever is not found in said instruments must have been
waived and abandoned by the parties. 12 Examining the deeds of sale, we cannot even make an inference that the sale
was subject to any condition. As a contract, it is the law between the parties. 13
Secondly, to buttress their argument, private respondents rely on the case of Land Settlement Development,
Co.vs. Garcia Plantation 14 where the Court ruled that a condition precedent to a contract may be established by parol
evidence. However, the material facts of that case are different from this case. In the former, the contract sought to be
enforced 15 expressly stated that it is subject to an agreement containing the conditions-precedent which were proven
through parol evidence. Whereas, the deeds of sale in this case, made no reference to any pre-conditions or other
agreement. In fact, the sale is denominated as absolute in its own terms.
Third, the parol evidence herein sought to be introduced would vary, contradict or defeat the operation of a valid
instrument, 16 hence, contrary to the rule that:
The parol evidence rule forbids any addition to . . . the terms of a written instrument by testimony
purporting to show that, at or before the signing of the document, other or different terms were
orally agreed upon by the parties. 17
Although parol evidence is admissible to explain the meaning of a contract, "it cannot serve the purpose of
incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the
writing unless there has been fraud or mistake." 18 No such fraud or mistake exists in this case.
Fourth, we disagree with private respondents' argument that their parol evidence is admissible under the exceptions
provided by the Rules, specifically, the alleged failure of the agreement to express the true intent of the parties. Such
exception obtains only in the following instance:

[W]here the written contract is so ambiguous or obscure in terms that the contractual intention of
the parties cannot be understood from a mere reading of the instrument. In such a case, extrinsic
evidence of the subject matter of the contract, of the relations of the parties to each other, and of
the facts and circumstances surrounding them when they entered into the contract may be
received to enable the court to make a proper, interpretation of the instrument. 19
In this case, the deeds of sale are clear, without any ambiguity, mistake or imperfection, much less obscurity
or doubt in the terms thereof.
Fifth, we are not persuaded by private respondents' contention that they "put in issue by the pleadings" the failure of the
written agreement to express the true intent of the parties. Record shows 20 that private respondents did
notexpressly plead that the deeds of sale were incomplete or that it did not reflect the
intention 21 of the buyer (petitioner) and the seller (private respondents). Such issue must be, "squarely
presented." 22Private respondents merely alleged that the sale was subject to four (4) conditions which they tried to
prove during trial by parol evidence. 23 Obviously, this cannot be done, because they did not plead any of the exceptions
mentioned in the parol evidence rule. 24 Their case is covered by the general rule that the contents of the writing are the
only repository of the terms of the agreement. Considering that private respondent Oscar Inocentes is a lawyer (and
former judge) he was "supposed to be steeped in legal knowledge and practices" and was "expected to know the
consequences" 25 of his signing a deed of absolute sale. Had he given an iota's attention to scrutinize the deeds, he
would have incorporated important stipulations that the transfer of title to said lots were conditional. 26
One last thing, assuming arguendo that the parol evidence is admissible, it should nonetheless be disbelieved as no
other evidence appears from the record to sustain the existence of the alleged conditions. Not even the other seller,
Asuncion Inocentes, was presented to testify on such conditions.
ACCORDINGLY, the appealed decision is REVERSED and the records of this case REMANDED to the trial court for
proper disposition in accordance with this ruling.
SO ORDERED.

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G.R. No. L-7991

January 29, 1914
LEON J. LAMBERT, plaintiff-appellant,
vs.
T. J. FOX, defendant-appellee.
O'Brien and DeWitt and C. W. Ney, for appellant.
J. C. Hixon, for appellee.
MORELAND, J.:
This is an action brought to recover a penalty prescribed on a contract as punishment for the breach thereof.
Early in 1911 the firm known as John R. Edgar & Co., engaged in the retail book and stationery business, found itself in
such condition financially that its creditors, including the plaintiff and the defendant, together with many others, agreed
to take over the business, incorporate it and accept stock therein in payment of their respective credits. This was done,
the plaintiff and the defendant becoming the two largest stockholders in the new corporation called John R. Edgar &
Co., Incorporated. A few days after the incorporation was completed plaintiff and defendant entered into the following
agreement:
Whereas the undersigned are, respectively, owners of large amounts of stock in John R. Edgar and Co, Inc;
and,
Whereas it is recognized that the success of said corporation depends, now and for at least one year next
following, in the larger stockholders retaining their respective interests in the business of said corporation:
Therefore, the undersigned mutually and reciprocally agree not to sell, transfer, or otherwise dispose of any
part of their present holdings of stock in said John R. Edgar & Co. Inc., till after one year from the date hereof.
Either party violating this agreement shall pay to the other the sum of one thousand (P1,000) pesos as
liquidated damages, unless previous consent in writing to such sale, transfer, or other disposition be obtained.
Notwithstanding this contract the defendant Fox on October 19, 1911, sold his stock in the said corporation to E. C.
McCullough of the firm of E. C. McCullough & Co. of Manila, a strong competitor of the said John R. Edgar & Co., Inc.
This sale was made by the defendant against the protest of the plaintiff and with the warning that he would be held
liable under the contract hereinabove set forth and in accordance with its terms. In fact, the defendant Foz offered to sell
his shares of stock to the plaintiff for the same sum that McCullough was paying them less P1,000, the penalty specified
in the contract.
The learned trial court decided the case in favor of the defendant upon the ground that the intention of the parties as it
appeared from the contract in question was to the effect that the agreement should be good and continue only until the
corporation reached a sound financial basis, and that that event having occurred some time before the expiration of the
year mentioned in the contract, the purpose for which the contract was made and had been fulfilled and the defendant
accordingly discharged of his obligation thereunder. The complaint was dismissed upon the merits.
It is argued here that the court erred in its construction of the contract. We are of the opinion that the contention is
sound. The intention of parties to a contract must be determined, in the first instance, from the words of the contract
itself. It is to be presumed that persons mean what they say when they speak plain English. Interpretation and
construction should by the instruments last resorted to by a court in determining what the parties agreed to. Where the
5|P a g e

language used by the parties is plain, then construction and interpretation are unnecessary and, if used, result in
making a contract for the parties. (Lizarraga Hermanos vs. Yap Tico, 24 Phil. Rep., 504.)
In the case cited the court said with reference to the construction and interpretation of statutes: "As for us, we do not
construe or interpret this law. It does not need it. We apply it. By applying the law, we conserve both provisions for the
benefit of litigants. The first and fundamental duty of courts, in our judgment, is to apply the law. Construction and
interpretation come only after it has been demonstrated that application is impossible or inadequate without them. They
are the very last functions which a court should exercise. The majority of the law need no interpretation or construction.
They require only application, and if there were more application and less construction, there would be more stability in
the law, and more people would know what the law is."
What we said in that case is equally applicable to contracts between persons. In the case at bar the parties expressly
stipulated that the contract should last one year. No reason is shown for saying that it shall last only nine months.
Whatever the object was in specifying the year, it was their agreement that the contract should last a year and it was
their judgment and conviction that their purposes would not be subversed in any less time. What reason can give for
refusing to follow the plain words of the men who made the contract? We see none.
The appellee urges that the plaintiff cannot recover for the reason that he did not prove damages, and cites numerous
American authorities to the effect that because stipulations for liquidated damages are generally in excess of actual
damages and so work a hardship upon the party in default, courts are strongly inclined to treat all such agreements as
imposing a penalty and to allow a recovery for actual damages only. He also cites authorities holding that a penalty, as
such, will not be enforced and that the party suing, in spite of the penalty assigned, will be put to his proof to
demonstrate the damages actually suffered by reason of defendants wrongful act or omission.
In this jurisdiction penalties provided in contracts of this character are enforced . It is the rule that parties who are
competent to contract may make such agreements within the limitations of the law and public policy as they desire, and
that the courts will enforce them according to their terms. (Civil Code, articles 1152, 1153, 1154, and 1155; Fornow vs.
Hoffmeister, 6 Phil. Rep., 33; Palacios vs. Municipality of Cavite, 12 Phil. Rep., 140; Gsell vs. Koch, 16 Phil. Rep., 1.)
The only case recognized by the Civil Code in which the court is authorized to intervene for the purpose of reducing a
penalty stipulated in the contract is when the principal obligation has been partly or irregularly fulfilled and the court can
see that the person demanding the penalty has received the benefit of such or irregular performance. In such case the
court is authorized to reduce the penalty to the extent of the benefits received by the party enforcing the penalty.
In this jurisdiction, there is no difference between a penalty and liquidated damages, so far as legal results are
concerned. Whatever differences exists between them as a matter of language, they are treated the same legally. In
either case the party to whom payment is to be made is entitled to recover the sum stipulated without the necessity of
proving damages. Indeed one of the primary purposes in fixing a penalty or in liquidating damages, is to avoid such
necessity.
It is also urged by the appelle in this case that the stipulation in the contract suspending the power to sell the stock
referred to therein is an illegal stipulation, is in restraint of trade and, therefore, offends public policy. We do not so
regard it. The suspension of the power to sell has a beneficial purpose, results in the protection of the corporation as
well as of the individual parties to the contract, and is reasonable as to the length of time of the suspension. We do not
here undertake to discuss the limitations to the power to suspend the right of alienation of stock, limiting ourselves to the
statement that the suspension in this particular case is legal and valid.
The judgment is reversed, the case remanded with instructions to enter a judgment in favor of the plaintiff and against
the defendant for P1,000, with interest; without costs in this instance.

G.R. No. L-18857

December 11, 1967

THE CAPITAL INSURANCE and SURETY CO., INC., plaintiff-appellant,

vs.
ESTEBAN M. SADANG and MARIA LACHICA, defendants-appellees.

Two executions were issued by the court for the enforcement of the above-mentioned decision in Civil Case
No. 30061 and after applying the proceeds of the sale of the properties in public auction there is still a
deficiency in the amount of P14,456.44 which, in view of the failure of the herein dependants to pay in spite of
plaintiff's repeated demands, had to become the subject of this instant case.

MAKALINTAL, J.:

It is the contention of plaintiff that by virtue of the indemnity agreement (Exhibit B) and the estate mortgage
(exhibit C) of the herein defendants, they are liable for the said deficiency of P14,456.44, plus interest, plus
attorney's feest and costs of the suit.itc-alf On the other hand, defendants contend that their liability under the
mortgage contract (Exhibit C) is limited to the first P20,000.00 that might be incurred under the bond and that
since Mateo Pinto actually paid Macondray Farms, Inc., the amount of P19,700.00, they are liable to pay only
amount of P300.00 which remain after deducting what was paid by Mateo Pinto to Macondray Farms, Inc.
from the first liability of P20,000.00.

The following statement of facts, reproduced from the brief for plaintiff-appellant, the Capital Insurance Surety Co., Inc.,
is admitted as correct by defendants-appellees:

After due hearing, the trial court rendered judgment on April 20, 1961 (pp. 93-101, Record on Appeal)
ordering defendants to pay to plaintiff only, the amount of P300.00 and without costs.

Achacoso, Ocampo and Simbulan for plaintiff-appellant.

L. Alba for defendants-appellees.

Plaintiff Capital Insurance & Surety Co., Inc., subscribed on June 21, 1954 to a bond (Exhibit A) in the amount
of P42,000.00 in behalf of Mateo Pinto and in favor of the Macondray Farms, Inc., the purpose of which was
to guarantee the payment of rentals of the fishpond and other obligations of Mateo Pinto as contained in the
lease agreement marked as Exhibit A-1.lawphil.net
To protect the interest of plaintiff Capital Insurance & Surety Co., Inc. from any liability that may arise from the
above-mentioned bond, Mateo Pinto and the defendants in this case, Esteban M. Sadang and Maria Lachica,
executed an idemnity agreement (Exhibit B) and a deed of real of real estate mortage (Exhibit C) on the
property of the defendants located in the Province of Nueva Vizcaya and covered by Transfer Certificate of
Title No. 2216 issued by the Register of Deeds of Nueva Vizcaya.
Mateo Pinto failed to pay the rentals of the leased fishpond to Macondray Farms, Inc., in the total amount of
P24,668.83.1
Because of the failure of Mateo Pinto to pay the said amount of P24,668.83 to Macondray Farms, Inc.,
plaintiff in the instant case as surety had to pay, as it did pay Macondray Farms, Inc., the amount of
P24,668.83 on May 14, 1956 to settle the obligation of Mateo Pinto with the said Macondray Farms, Inc.
Notwithstanding repeated demands, Mateo Pinto and his indemnitors including herein defendants failed to
reimburse the Capital Insurance & Surety Co., Inc., the the said amount of P24,688.83.
Because of such failure to make reimbursement, the Capital Insurance & Surety Co., Inc., filed Civil Case No.
30061 against Mateo Pinto and his indemnitors including the defendants in this instant case for the collection
of the above-mentioned amount.
On the strength of the agreement of the parties Civil Case No. 30061 (Exhibit E) wherein it is agreed among
others, that if after the sale of all the said properties, the judment shall not have been fully satisfied, then
plaintiff may file as separate civil action against the defendants-spouses, Esteban M. Sadang and Maria
Lachica, the other indemnitors, but at the same time dismissed the case against the herein defendants
without prejudice (Exhibit F-1).

6|P a g e

To point on which the parties disagree is the interpretation of the following stipulation in the mortgage contract executed
by defendants-appellees:
This mortgage is constituted to indemnify the mortgagee for any damage, cost, expenses and charges of
whatever kind and nature that it may incur or sustain as a consequence of having acted as surety on the
bond referred to above, and or its substitution, modification, alteration, change and/or renewals. That liability
secured by the above properties is limited to the first P20,000.00 that might be incurred under the bond
issued in favor of the Macondray Farms, Inc.
Appellant lays stress on the general statement of appellees' liability as it appears in the contract, to wit; "to indemnify the
mortgagee for any damage, cost, expenses and charges of whatever kind and nature that it may incur or sustain as a
consequence of having acted as surety or the bond. . . ." Similar stress is laid on the fact that because the principal
debtor, Mateo Pinto, paid to Macondray Farms, Inc., the sum of P19,700.00 before he became in default, no liability
ever attached to appellant under its bond for that amount, and hence it should not be considered as part of, or applied
to, "the first P20,000.00 that might be incurred under the bond . . .," which defined the limit of appellees' obligation.
At first blush the argument seems logical. But the real intention of the parties is revealed by the testimony of appellee
Esteban Sadang concerning the circumstances which led to the inclusion of the particular stipulation aforequoted. We
quote from the record:lawphil.net
Q.
In the course of your testimony in the last hearing you mentioned that there have been two contracts of
mortgage prepared in connection with this property belonging to you and situated in Nueva Vizcaya and you
also stated that the first draft or first copy of the Deed of contract was not signed by You.itc-alf Will you please
state to the Court the reason for not signing the first deed of mortgage that was presented to you for
signature?
A.
When Mr. Pinto brought me to the Capital Insurance Company I was permitted to see the written
document prepared by Atty. Achacoso with Atty. Nera as his companion and in the presence of one, the
mestizo who was supposed to be the manager of the Bonding Department. At that time, I was made to
understand that if I would consent to be one of the bondsmen I would only answer to the first P20,000.00 of
the total P42,000.00 bond which the Capital Insurance was supposed to underwrite to Mateo Pinto in favor of
Macondray Farms and I told Atty.lawphil.net Achacoso in the presence of the mestizo the then Manager of

the Bonding Department that I was only supposed to answer to the first P20,000.00 of the total bond
indebtedness of P42,000.00. That the moment the first P20,000.00 is paid the bonding company
automatically releases my responsibility to them.
Q.
Showing to you again this Exhibit C for the plaintiff, is this the second draft or second contract that was
prepared by Mr. Achacoso after you have made that interview in clarifying in so far as liability with the bond is
concerned?
(Witness looking at Exhibit C)
A.
Yes, this last letter was the one inserted, "That the liability secured by the above properties is limited to
the first P20,000.00 that might be incurred under the bond issued in favor of the Macondray Farms, Inc."
Q.
In the first draft of the contract of mortgage that was sought to be signed by you do you mean then that
this last three lines of the second paragraph of page 2 of Exhibit 3 did not exist?
A.
It did not and so I insisted it should be specifically mentioned that I was answerable only to the first
P20,000.00.
Q.

Who made you understand that?

A.

Atty. Achaeoso in fact Atty. Nera was present including that mestizo.

Q.
What did Mr. Achacoso explain to you as to the extend of the liability of the property on the last three
lines of the second page of Exhibit C?
A.
He emphatically informed me that when that liability will be paid may free me to some connected
liability with the other bondsmen and he said, it is very clear. So I consented to sign with my wife.
The foregoing testimony is clear enough. Esteban Sadang agreed to be an indemnitor only on condition that he would
answer for the "first P20,000.00 of the total P42,000.00 bond," and that "the moment the first P20,000.00 is paid the
bonding company automatically releases my responsibility to them." The trial court found the said testimony to be
uncontradicted. If the mortgage contract as actually drafted seems to be vague or ambiguous, the doubt must be
resolved against appellant, whose lawyer prepared the document, and in accordance with the real intention of the
parties as explained by defendants-appellees.
The trial court correctly held said defendants-appellants liable only for the sum of P300.00. However, it failed to provide
for the stipulated interest thereon at the rate of 12% per annum, which if not paid would be liquidated and added to the
capital, quarterly, and to order foreclosure of the mortgaged properties in case of non-payment.
WHEREFORE, the judgment appealed from is affirmed, with the modification indicated above concerning interest, the
same to begin from the date of the filing of the complaint. In case of non-payment of the sum thus adjudged, including
interest, the mortgaged properties will be sold as provided in Rule 68. No costs in this instance.

7|P a g e

G.R. No. L-39087 April 27, 1984

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ROGELIO DE JESUS y QUIZON, alias "ELIONG," accused-appellant.
The Solicitor General for plaintiff-appellee.
Rafael D. Abierra Jr. for accused-appellant.

Meanwhile, Pastora Simon, who had already walked some 150 meters away from their house,
when sensing it was about to rain, hurried back to the house to get cellophane with which to shield
her from the rain (p. 17, tsn., March 21, 1974). Upon her return to the house, she found Rogelio de
Jesus naked lying on top of Clara Mina whose legs were spread apart (p. 19, tsn., Id.). Seeing
them in that position, she rushed to the kitchen to get a club but Rogelio spotted her and ran away.
(p. 20, tsn.,Id.).
The barrio captain, Glicerio Guzman, to whom Pastora Simon had immediately reported the
incident, looked for Rogelio but failed to locate him (p. 20, tsn., March 21, 1974; pp. 10, 20, tsn.,
March 22, 1974).
Returning from the barrio captain's house, Pastora Simon investigated Clara, who revealed to her
that she was carried away from the trunk where she was seated, then forcibly laid on the floor to
have sexual intercourse with Rogelio (pp. 20, 21, tsn., March 21, 1974).

CONCEPCION, JR., J.:+.wph!1

The accused, Rogelio de Jesus y Quizon appeals from the decision of the Circuit Criminal Court, First Judicial District in
its Criminal Case No. CCC-1-80, Isabela (II-329) finding him guilty beyond reasonable doubt, of the crime of rape as
defined and penalized under Article 335, paragraph 2 of the Revised Penal Code and sentencing him, after appreciating
in his favor the mitigating circumstance of voluntary surrender, to suffer the penalty ofreclusion perpetua to indemnify
the offended party Clara Mina y Simon in the amount of P10,000.00 plus another P5,000.00 as moral and exemplary
damages, without subsidiary imprisonment in case of insolvency, and to pay the costs.
The facts are as follows: t.hqw
Clara Mina, an unmarried woman of 28, lived with her parents in barrio Amistad, Alicia, Isabela (p.
7, tsn., March 21, 1974).
Clara Mina, however, is feeble-minded. She is unable to comb her hair, bathe herself and wash her
clothes (pp. 21, 31, 32, tsn., March 21, 1974). Because of her mental condition, she just stayed in
the house, doing no household chores (p. 31, tsn., Id.).
The accused, Rogelio de Jesus, a 19-year old farmer, who lived in the house of his sister some 15
meters away from the victim's house, knew of Clara's mental infirmity, and has often seen her left
alone in the house (p. 20, tsn., March 21, 1974; pp. 38, 47, 49, tsn., April 25, 1974).
At about 2:00 o'clock in the afternoon of Jan. 3, 1974, Pastora Simon went out to the field in order
to plant palay, leaving her daughter Clara Mina alone in the house. Her husband (Clara's father),
had gone to a place called Soliven four days before, while the other members of the household had
also left for the field (pp. 17, 18, 19, tsn., March 21, 1974).
That afternoon, Clara Mina was seated on top of a trunk when Rogelio de Jesus suddenly entered
the house, carried her in his arms and laid her on the floor (pp. 8, 13, tsn., March 21, 1974).
Objecting to what was being done to her, Clara gave an outcry "Madi! Madi!" (which translated
means "I don't like! I don't like!") Rogelio, ignoring her cries, removed her panties as well as his
own trousers. He lay on top of her, inserted his penis into her vagina and performed the sexual act
(pp. 7, 8, 9, 13,14, 15, tsn., Id.).
8|P a g e

The next day January 4, 1974 Clara Mina, accompanied by her parents, denounced Rogelio
de Jesus to the police authorities (p. 20, tsn., March 22, 1974). Clara Mina was examined by
Fernando Babaran, Municipal Health Officer of Echague, lsabela at the Southern Isabela
Emergency Hospital, the municipal health officer of Alicia being then on leave (p. 6, tsn., March 22,
1974). The medical certificate, Exhibit "C", issued by Dr. Babaran, shows the following findings:
(1) hymenal lacerations at 3 o'clock, 8 o'clock and 11 o'clock.
(2) vagina admits one finger with ease. Two fingers with difficulty.
(3) fresh perineal abrasion.
(4) smear, not done due to lack of microscope.
(5) contusion left temporal area. Lesions to heal within one week. (p. 3, Record).
According to Dr. Babaran, the abrasions were possibly inflicted the day prior to the examination
and that the contusion on the left temporal area of the girl's head could have been caused when
her head was pushed against a hard object (pp. 11, 12, tsn., March 22, 1974).
Subsequently, Rogelio de Jesus was surrendered by his brother-in-law, a councilor to the Alicia
Police Department. He executed an affidavit, Exhibit "D" subscribed before Alicia Municipal Judge
Flor Egipto on January 5, 1974, admitting that he had sexual intercourse once with Clara Mina, but
denying that he raped her (p. 7, record).
The accused denied that he had forced the complainant to have sexual intercourse with him and that he only inserted
his forefinger inside the complainant's private parts. He testified that he admitted having sexual intercourse once with
complainant in his affidavit 1 because of maltreatment employed upon him by the jail guards.
While the affidavit executed by the accused is not admissible in evidence for lack of evidence showing that the accused
during the custodial investigation was apprised of his constitutional rights under Art. IV, Sec. 20, of the New

Constitution, 2 still there is sufficient evidence on record that the accused had performed the sexual act to wit: t.
hqw
1. The accused testified that he merely inserted his forefinger into the complainant's vagina to cure
her of her mental malady. The records, however show, from the testimony of both the prosecution
and the defense, that the accused laid on top of complainant. If appellant's purpose was merely to
insert his forefinger into the complainant's vagina, then there is no necessity of lying on top of
complainant.
2. Complainant testified, contrary to the testimony of the accused, that the latter brought out his
penis and inserted it into her vagina which pained her a lot.
3. The hymenal lacerations and the fresh perineal abrasions in complainant's vagina corroborated
her testimony that the accused had sexual intercourse with her.
The accused assailed the competence of the complainant as a witness on the ground that being feeble minded she is
not a competent witness in contemplation of the rules and therefore her testimony should have been rejected by the
lower court. That the complainant was feeble-minded and had displayed difficulty in comprehending the questions
propounded on her is an undisputed fact. However, there is no showing that she could not convey her Ideas by words or
signs. It appears in the records that complainant gave sufficiently intelligent answers to the questions propounded by
the court and the counsels. The court is satisfied that the complainant can perceive and transmit in her own way her
own perceptions to others. She is a competent witness.
Having sexual intercourse with a feeble-minded woman is rape. The offense is described under paragraph 2 of Article
335 of the Revised Penal Code, that is, the offender having carnal knowledge of a woman deprived of reason. The
Court, in the case of People vs. Daing, 3 said:
The offense committed by appellant is rape described under paragraph 2 of Article 335 of the Revised Penal Code, that
is, the offender having carnal knowledge of a woman deprived of reason. The deprivation of reason contemplated by
law does not need to be complete. Mental abnormality or deficiency is enough. So it was held by the Supreme Court of
Spain that a man having carnal knowledge of a woman whose mental faculties are not normally developed or who is
suffering from hemiplegia and mentally backward or who is an Idiot commits the crime of rape. ...
Being feeble-minded, complainant is incapable of thinking and reasoning like any normal human being and not being
able to think and reason from birth as aforesaid, and undoubtedly devoid or deficient in those instincts and other mental
faculties that characterize the average and normal mortal, she really has no will that is free and voluntary of her own;
hers is a defective will, which is incapable of freely and voluntarily giving such consent so necessary and essential in
lifting coitus from the place of criminality. 4 In this connection, the Solicitor General properly stated: t.hqw
That complainant possesses such a low mental capacity, to the extent of being incapable of giving
consent, could be gleaned from the fact, as testified to by her mother, that she is unable to do the
simple tasks of combing her hair and bathing herself. Thus, even granting it to be true, as counsel
has insinuated, that complainant had submitted to the sexual act without resistance (p. 9
Appellant's Brief) such cannot be construed as consent on her part, so as to preclude it from being
rape. Incapable of giving consent, she could not thus consent in intelligently. 5
WHEREFORE, the appealed decision is AFFIRMED in toto.
9|P a g e

G.R. No. 96848 January 21, 1994

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ALEJANDRO SALOMON Y OLPANGO @ "ALE", @ "BOYET" and FELICIANO CONGE @ PEPING, accusedappellants.
The Solicitor General for plaintiff-appellee.
Anecio R. Guades for accused-appellants.

her, although with difficulty because she was still a virgin. She felt pain in her vagina and "something slippery." She
could not cry out or repel the attack because the two were stronger than she and Conge was holding a bolo. 5 After her
rape, Salomon sucked and twisted her nipples and demanded that he suck his penis. Her low mentality was
demonstrated in her angry testimony of her refusal: "The devil with him, it is not an icedrop." 6
The prosecution presented several other witnesses, 7 including Dr. Tanseco, who affirmed her medical certificate of the
complainant's examination. On cross-examination, she declared that the laceration in Sylvia's vagina could have been
caused by penetration of a blunt instrument such as an average-sized penis. 8
The two accused flatly denied the charge against them. Conge swore that on the night in question, Sylvia arrived at the
highway and loudly demanded a lamp from the people in Epifanio de Guzman's house. He approached her and said
there was no lamp to spare, whereupon, as he turned his back to leave, she hit him in the neck with a piece of wood,
causing him to stagger. In swift reaction, he caught Sylvia by the waist and pushed her to the ground and as she lay
there exposed (she was not wearing any underwear), he angrily shoved his five fingers into her vagina. Sylvia cried out
at the top of her voice. Fearing that her relatives might come, he withdrew his hands and immediately left the place. 9

CRUZ, J.:
The novel defense in this prosecution for rape is that the physical evidence of the complainant's violation was caused
not by the male organ but by the five fingers of one of the appellants that were thrust into her vagina in anger and not
lust. The defense faults the trial judge for giving credence to the complainant. It avers that her testimony should not
have been accepted at all because she is admittedly a mental retardate and therefore unreliable per se.
These curious arguments will not be dismissed out of hand by this Court. The appellants are entitled to be heard in their
defense, no less than the prosecution, although neither party is necessarily to be believed if its evidence falls short of
the strict standards of the law.
The trial court found that on October 11, 1987, while Sylvia Soria, a
20-year old mental retardate, was walking along the Maharlika Highway at Casabahan, Gandara, Samar, Alejandro
Salomon and Feliciano Conge, who were apparently waiting for her, accosted her and forcibly took her to the
ricefield some ten meters away. There she was raped by Salomon with Conge's assistance. On her way home, she met
her brother Senecio, to whom she related her ordeal. The two of them reported her rape to their father. That same night,
the family walked the three-kilometer distance to the police station, where Restituto Soria signed a complaint for the
rape of his daughter by Salomon and Conge. 1 Sylvia was medically examined at the Gandara General Hospital by Dr.
Susan Tanseco, who issued the following certificate: 2
A physical examination has been done on Miss Sylvia Soria, 20 years of age, a resident of Brgy.
Casab-ahan, Gandara, Samar. P.E. showed a single, linear, laceration on the labia minora at 6:00
o'clock position. There are isolated erythematous areas on both thighs. There is also the presence
of sandy particles on the genital area. Speculum exam, however, showed negative findings.
Three days later, Salomon and Feliciano could no longer be found. It was only after a four-month search that they were
arrested in Aguado, Plaser, Masbate, from where, after being detained there for one month, they were taken back to
Samar. 3 Following a protracted investigation, an information for rape was filed against them on August 9, 1988, with the
Regional Trial Court in Calbayog City. 4
The principal witness for the prosecution was Sylvia Soria herself, who recounted in detail the manner of her ravishment
by Salomon with the help of his co-accused Conge. She described how she was dragged to the ricefield by the two
accused and there undressed against her will. As Conge spread and pinned her legs, Salomon mounted and penetrated
10 | P a g e

Salomon corroborated his co-accused. He testified that he saw the whole incident, being then about three-arms length
away from the highway. 10 De Guzman agreed, saying that he was also in the yard of his house at the time, and playing
his guitar, when the encounter occurred. 11
Both Salomon and Conge also protested that they had not gone to Masbate in order to escape as the trial court held.
They pointed out that they were in fact investigated by the police the day following the alleged incident but no action
was taken against them. 12 The truth, they said, was that they had gone to Masbate to buy two horses on instructions
from Salomon's father, Epifanio, who had given them P3,000.00 for this purpose. 13
Judge Ricardo A. Navidad disbelieved the accused and found them guilty as charged. As conspirators, they were each
sentenced to reclusion perpetua and held solidarily liable to the complainant for P30,000.00 as civil indemnity,
P22,000.00 as moral damages, P5,000.00 as exemplary damages, and P5,000.00 as attorney's fees. They were also
ordered to pay the costs. 14
In the appellants' brief (incorrectly denominated as a Petition for Review), the defense suggests that the testimony of
Sylvia Soria is flawed because she is an insane person who was confined at the National Mental Hospital a few months
before the alleged incident. 15 It is also argued that her testimony was fabricated at the instance of her father, who had a
bone to pick with Salomon's father. The appellants insist that their own version of the incident is more plausible and
should not have been rejected by the trial court in view of the constitutional presumption of innocence in their favor.
A mental retardate is not for this reason alone disqualified from being a witness. As in the case of other witnesses,
acceptance of his testimony depends on its nature and credibility or, otherwise put, the quality of his perceptions and the
manner he can make them known to the court. 16 Thus, in People v. Gerones, 17 the Court accepted the testimony of a
rape victim notwithstanding that she had the mentality of a nine or ten-year old "because she was able to communicate
her ordeal... clearly and consistently." In the case of People vs. Rondina, this Court declared:
The testimony of the offended party herself was especially telling and credible despite the fact that
she was somewhat mentally deficient, as the trial court noticed. Although she was really of limited
intelligence, the complainant nevertheless did not forget the harrowing experience she suffered
during that frightful night in the bushes when the three men seared her memory with the lust they
forced upon her. The tale she narrated in court was not woven out of sheer imagination but born in
anguish and remembered with pain and as plain an unembellished as the simple life she led. If she

spoke in forthright language at the trial, it was because she was speaking the truth of that horrible
ravishment she could not push out of her mind.
In the case before us, the trial court noted that although Sylvia's speech was slurred and it was necessary at times to
ask her leading questions, "her testimony was positive, clear, plain, coherent and credible." Her mental condition did not
vitiate her credibility. We also believe, as we have observed often enough in many cases 18 that a woman will not
expose herself to the humiliation of a rape trail, with its attendant publicity and the morbid curiosity it will arouse, unless
she has been truly wronged and seeks atonement for her abuse.
The defense points to a supposed hostility between Sylvia's and Salomon's respective fathers due to a conflict over a
piece of land and the administrative charge Epifanio filed against Restituto when they were both teaching at the local
school. It suggests that this was the reason for Sylvia's false charge against Salomon, who has simply been caught in
the crossfire, as it were, between Restituto and Epifanio.
The connection is far-fetched. It is unnatural for a parent to use his offspring as an engine of malice, especially if it will
subject a daughter to embarassment and even stigma, as in this case. There is no evidence that Sylvia's father is an
unnatural parent. Besides, the enmity itself is in the view of the Court not deep enough to provoke the charge, assuming
that Restituto Soria was willing to use his daughter to falsely accuse his enemy's son. Significantly, the complaint was
filed by Restituto against the son and not the father who was his real adversary.
The lack of a finding of spermatozoa during Sylvia's medical examination did not conclusively establish an absence
thereof because the examining doctor simply did not have the necessary equipment to make a more thorough
report. 19 In fact, she suggested another examination at the Calbayog General Hospital. 20 At any rate, we have held that
the absence of spermatozoa in the complainant's vagina does not negate the commission of rape; there may be a valid
explanation for such absence, as when the semen may have been washed away or when the rapist failed to ejaculate. 21
The appellants decry the trial judge's conclusion that they had gone to Masbate to escape, but it appears that this was
really their intention. In the first place, it is not true that they were investigated before they left, for the fact is Salomon's
father stopped the investigation on the ground that there was no lawyer to represent them. 22 It is also noted that
Salomon used another name in Masbate and called himself Boyet instead of Ale, his real nickname. 23Salomon and
Conge traveled from place to place in that province but were not able to buy a single horse during the four months that
they were there. Instead, they used the P3,000.00 Salomon's father had given them not only for their daily needs but
also "in dancing and drinking," as Conge put it. 24 Well indeed has it been said that "wicked flee when no man pursueth
but the innocent are as bold as a lion." The appellants' trip to Masbate was unmistakably a flight from justice.
And now let us consider the interesting defense of what we may call Sylvia's "manual rape" for lack of a more
descriptive term. Admitting the laceration in Sylvia's vagina, Salomon nevertheless maintains that it was caused not by
his penis but by Conge's fingers. Conge's purpose was to punish her and to disable her and thus prevent her from
hitting him again.
The trouble with this defense is that it is too comical for words. It looks like a bawdy-house skit featuring a mad avenger
and his naughty fingers. Besides, the two accused and De Guzman have a confused recollection of how this remarkable
incident happened, the first perhaps in the annals of Philippine jurisprudence.
Conge declared in his affidavit that Sylvia hit him only once and then swore on direct examination that he was hit twice,
whereas both Salomon De Guzman swore he was hit only once. 25 Salomon and Conge said that Sylvia was wearing
pants but De Guzman insisted with equal certainty that it was a skirt. 26 Salomon said Sylvia's pants were pulled down to
her knees, but Conge declared that she was completely disrobed, then said the pants came down only to her
11 | P a g e

ankles. 27 Conge first said his fingers were spread when they thrust them inside Sylvia's vagina but, sensing the trial
court's disbelief, recanted and said he put his fingers together in the shape of a cone before plunging them into Sylvia's
bared organ. 28
We are satisfied with the findings of the trial court that the appellants, in conspiracy with each other, committed the
crime of rape upon Sylvia Soria, with Salomon actually violating her as Conge helped restrain her while also frightening
her with his bolo. The crime was committed with force and intimidation, and worse, against a mental retardate, who
fortunately was nevertheless able to narrate the details of her outrage. The theory of the defense is absurd. The trial
court was correct in rejecting it. The assessment of the evidence, especially the credibility of the witnesses, is the
primary function of the judge presiding at the trial. We defer to the findings of the trial court in the case at bar, there
being no showing that they were reached without basis.
The Court cannot conclude this opinion without remarking on the extraordinary lengths to which an accused will go to
falsify the truth and evade the sanctions of the law. The defense in this case is illustrative of such desperation. What the
appellants have not considered is that the Court is not without experience in detecting falsehood and should not have
been expected to be deluded by the ridiculous story they blandly submitted. Counsel should remember that gullibility is
not one of the traits of this Court.
WHEREFORE, the appeal is DISMISSED. The decision of the trial court is AFFIRMED, except for the award of moral,
exemplary, and actual damages and attorney's fees, which were disallowed. The civil indemnity is retained at
P30,000.00. Costs against the appellants.
SO ORDERED.

G.R. No. 104461

Mesa, Manila. They boarded a passenger jeepney bound for Cubao via Aurora Blvd. The jeepney was fully loaded with
the driver, his wife and two children on the front seat and eight passengers on each of the two parallel back seats. 2

February 23, 1996

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
ROMEO MENDOZA y REYES and JAIME REJALI y LINA, defendants-appellants.
DECISION
PANGANIBAN, J.:
The main question answered in this case is whether the accused should be convicted of highway robbery with homicide
punishable under Presidential Decree No. 532, or of robbery with homicide under Article 294 of the Revised Penal
Code.
Appellants Romeo Mendoza and Jaime Rejali were charged on June 17, 1991 before the Regional Trial Court in Pasig,
Metro Manila (Branch 156) of the crime of "ROBBERY HOLD-UP (sic) with HOMICIDE (P.D. No. 532, Anti-Piracy and
Anti-Highwat (sic) Robbery Law of 1974)" 1 in an Information which reads as follows:
That on or about the 29th day of May 1991, in the municipality of San Juan, Metro Manila, Philippines, a
place within the jurisdiction of this Honorable Court the above-named accused, armed with gun and knives,
conspiring and confederating together with one alias Jack whose true identity and present whereabouts is still
unknown, and mutually helping and aiding one another with intent to gain and by means of force, violence
and intimidation, did then and there wilfully, unlawfully and feloniously take, rob and divest one Glory Oropeo
of cash money amounting to P30.00, while the said victim was aboard a passenger jeep, cruising along
Aurora Blvd., San Juan, Metro Manila, which is a Philippine Highway, to the damage and prejudice of the
owner thereof, in the aforementioned amount of P30.00; that on the occasion of said robbery (hold-up) and
for the purpose of enabling them to take, rob and carry away personal belongings of all passengers in
pursuance of their criminal act said accused, did then and there wilfully, unlawfully and feloniously attack,
assault and employ personal violence upon the passengers (sic) of said passenger jeep, one Ramilyn
Zulueta by then and there hitting her head with a gun and kicked (sic) her out of the passenger jeep which
caused her to fall in (sic) the pavement hitting her head on the ground, thereby inflicting upon the latter mortal
injuries which directly caused her death, while Ma. Grace Zulueta, punching her face and hitting her head
with a gun, as a result of which said Ma. Grace Zulueta sustained physical injuries which required medical
attendance for a period of less than nine (9) days and incapacitated her from performing her customary labor
for the same period of time.
CONTRARY TO LAW.
The records show that both accused were assisted by their counsel de oficio, Atty. Fernando Fernandez of the Public
Attorney's Office (PAO), when they pleaded not guilty to the charge upon arraignment on August 9, 1991.
Evidence for the Prosecution
The prosecution thereafter established that on May 29, 1991, at about 9:00 in the evening, 17-year-old Ma. Grace
Zulueta and her elder sister, Ma. Ramilyn, were on their way home from their grandparents' house in Altura Ext., Sta.
12 | P a g e

The Zulueta sisters were seated near the rear entrance of the jeepney 3 with accused Romeo Mendoza seated beside
Grace. 4 It was through Mendoza that Grace handed over their fare to the driver as the jeepney passed by the SM
complex. 5 Glory Oropeo (or Lory Europeo 6 ), who boarded the same jeepney near the Stop and Shop Supermarket,
was seated behind the driver. Accused Jaime Rejali was beside Glory while their companion named Jack, who has
remained at large, was seated across her. 7
When the jeepney reached the dark portion of Aurora Blvd. in San Juan, Metro Manila, near St. Paul's College, just after
the bridge and before Broadway Centrum, someone announced a hold-up. 8 Both Mendoza and Rejali had guns while
Jack was armed with a knife. It was Rejali who fired his gun. 9 Jack told the Zulueta sisters that they would "bring" the
sisters along. As the accused appeared drunk, the sisters ignored them. However, a male passenger jumped off the
jeepney and a commotion ensued. Perplexed ("naguluhan") by this turn of events, the accused held Ramilyn who
started kicking, trying to extricate herself from their grasp. This prompted Mendoza to hit her on the head with his gun.
He boxed and kicked her, causing Ramilyn to fall out of the jeepney into the street where she rolled. 10
Mendoza then held Grace by her right arm. As she struggled, Grace shouted, "bitawan mo ako, bitawan mo ako," in an
attempt to call the attention of the drivers of the other vehicles on the road. One of the accused hit Grace on the head
with a gun causing her to lose consciousness. 11 (She finally came to at the St. Luke's Hospital; she was confined there
up to June 7, 1991. 12) While all this was happening, Rejali poked his gun at the other passengers.13
From Glory, the accused were able to get the amount of P30.00. She handed it to the holdupper seated in front of her.
When the commotion took place, the driver slowed down the jeepney but the holduppers told him to keep on moving.
One of them ordered the driver to proceed to J. Ruiz St. and make several turns until, when they reached Paterno, the
culprits alighted and made their escape. 14
Ramon Zulueta, the father of Grace and Ramilyn, learned about the incident from his other daughter, Joralyn, who was
informed that Grace was at the St. Luke's Hospital. Grace, who was then a student employed at the Pizza Hut for
P3,000.00 a month, was confined in said hospital from May 30 to June 7, 1991 for head trauma; she had contusions
and hematomas on the left temporal region and on the right occipito-parietal and anterior temporal regions, and
abrasions on the supra orbital area as well as elbow. 15 Ramon Zulueta spent around P19,000.00 for Grace's
hospitalization. 16
Upon learning from Grace that Ramilyn had been with her, Ramon Zulueta surmised that she might have been brought
to the hospital nearer the place of the incident, the UERM hospital. When he got there, he learned that Ramilyn, 21
years old and a computer management student, had already died of severe, traumatic head injuries. 17 The Zulueta
family spent around P15,000.00 for her interment. 18
Two days after the incident, Ramon Zulueta was informed that the jeepney driver and his wife had "surrendered" to the
police station in San Juan. The following day, he went there but the driver was not around. He gave a statement to the
police. 19
By fluke of fate, it was Grace herself who brought about the apprehension of Mendoza. On the morning of June 12,
1991, Grace saw Mendoza selling ice cream along Altura St. She noticed Mendoza staring at her. When she stared
back, Mendoza lowered his gaze and left immediately. That same afternoon, she saw him again. Considering her poor
eyesight, she was instructed by her cousin to buy ice cream from Mendoza so that she could get near enough to be
sure if he was indeed one of the holduppers. When she approached and asked Mendoza, "Mama, kilala kita?", he could

not look her in the eyes and seemed confused. Certain now that he was one of the holduppers, Grace announced to her
brother and the other people present that Mendoza was one of the holduppers. Mendoza tried to make a run for it, but
the people gave chase and overtook him. 20

In this appeal, appellants fault the trial court for giving credence to the "inconsistent, conflicting and contradictory
testimonies" of prosecution witnesses Grace Zulueta and Glory Oropeo and for convicting them of the crime charged
"despite the failure of the prosecution to prove their guilt beyond reasonable doubt." 28

Mendoza was brought to the police station where he was identified by Grace in a line-up. 21 Rejali was apprehended that
same night by police operatives. According to SPO1 Dalmacio Luces, Lucia Salinas, the wife of Jeepney driver Virgilio
Salinas, described one of the suspects to the NBI cartographer who came out with a sketch of his face. 22 However,
Luces failed to get a statement from Lucia. 23

Although not directly raised by the appellants, we find upon a thorough scrutiny of the facts that there is yet another
question which is of concern to the bar and the bench: are the facts attendant to this case constitutive of the crime of
highway robbery with homicide under Pres. Decree No. 532 or of the felony of robbery with homicide under Art. 294 of
the Revised Penal Code?

Evidence for the Defense

The Court's Ruling

Appellants interposed denial and alibi as defenses. Both of them admitted knowing each other as they were working as
ice cream vendors at the Ana Maria Ice Cream Factory in 1045 Balic-balic, Sampaloc, Manila where they also lodged in
rooms provided by their employer. Mendoza, 28 years old, swore that on that fateful day, he sold ice cream from 8:30
a.m. to about 4:00 p.m. From the factory, he went as far as V. Mapa St., passing under the bridge near the Stop and
Shop Supermarket. By 5:30 in the afternoon, he was back at the factory. He spent the night of May 29, 1991 in his living
quarters at the factory taking care of his child as his wife was pregnant. 24

This appeal hinges primarily on the issue of credibility of witnesses. As this Court has ruled in innumerable cases, the
trial court is best equipped to make the assessment on said issue and therefore, its factual findings are generally not
disturbed on appeal unless the court a quo is perceived to have overlooked, misunderstood or misinterpreted certain
facts or circumstances of weight, which, if properly considered, would affect the result of the case and warrant a reversal
of the decision involved. 29 We do not find in the instant case any such reason to depart from said general principle.
Nevertheless, in the interest of substantial justice, we shall confront the issues raised herein by the appellants.

For his part, 27-year-old Rejali testified that he also sold ice cream on the date in question, from 7:30 a.m. to 4:00 p.m.,
along E. Tuazon St. near Balic-balic. He claimed that he had not gone to San Juan as he did not even know where San
Juan was, being new in the vicinity. Once back in the factory, he prepared ice cream for sale the next day. Then he
rested in his room. 25

Appellants allege the following "inconsistent" testimonies of the prosecution eyewitnesses: (a) Grace testified that it was
Rejali who shouted "hold-up", pulled out a gun and fired, in contradiction to Glory's testimony that the man in front of
her, referring to Jack, announced the hold-up, and (b) at the direct examination, Grace pointed out that she was struck
behind her right ear but during cross-examination, she said that she was hit on the left ear.

Myrna Balderama, who also stayed in the living quarters within the same ice cream factory, corroborated the testimonies
of the two accused. According to her, she saw Mendoza enter the compound in the afternoon of May 29, 1991. From
outside her room, she could see Mendoza's room; on the night in question, she saw him taking care of his child. As to
Rejali, she knew that he did not leave the premises that evening as she had a conversation with him up to 10:00 p.m.
while he was preparing ice cream. 26

The first inconsistency may be attributed to the difference in the relative positions of Grace and Glory inside the jeepney.
Grace was seated near the rear entrance of the jeepney while Glory was behind the driver. Because Grace was far from
both Jack and Rejali who were seated near Glory, this could have affected her perception of who announced the holdup. At any rate, such disparity in their testimonies does not at all derail the sufficiently established fact that both
appellants herein participated in the hold-up. As regards the injuries sustained by Grace, the certificate issued by her
attending physician, Dr. Sosepatro Aguila, states that she sustained injuries on bothsides of the head 30, clearly showing
no "contradictions" in her testimony with respect to where she was hit.

On March 10, 1992, the trial court 27 rendered the Decision subject of this appeal. Its dispositive portion reads as
follows:
WHEREFORE, premises considered, the Court finds both accused ROMEO MENDOZA y REYES and JAIME
REJALI y LINA guilty beyond reasonable doubt of the crime of Violation of Presidential Decree No. 532 (AntiPiracy and Anti-Highway Robbery Law of 1974) and hereby sentences each of them to suffer the penalty
of reclusion perpetua with all its accessory penalties, to indemnify the heirs of Ramilyn Zulueta in the amount
of FIFTY THOUSAND PESOS (P50,000.00), to pay the sum of P23,673.35 by way of reimbursement of the
hospitalization, burial and other related expenses for Ramilyn Zulueta and the further sum of P30,000.00 by
way of moral and exemplary damages; to pay Glory Oropeo the sum of P30.00 by way of reparation of the
stolen cash money; to pay Ma. Grace Zulueta the sum of P6,400.00 by way of reimbursement of her
hospitalization expenses, all without subsidiary imprisonment in case of insolvency and to pay the costs.
In the service of their sentence, the accused shall be credited in full with the period of their preventive
imprisonment.
SO ORDERED.

13 | P a g e

Be that as it may, these "inconsistencies" or "contradictions" are minor ones which do not have any material bearing on
the culpability of the appellants as they do not in any way refute their positive identification by the two eyewitnesses as
the perpetrators of the holdup. 31 On the contrary, they reflect the truthfulness of the testimonies of Grace and Glory. As
this Court said in People vs. Retuta 32:
The discrepancy signifies that the two witnesses did not deliberately pervert the truth in their narrations. The
discordance; in their testimonies on minor matters heightens their credibility and shows that their testimonies
were not coached or rehearsed (People v. Doria, 55 SCRA 425). As this Honorable Court held in People v.
Agudu, 137 SCRA 516 to wit:
"However, the variance, if any, is on a minor detail which would not destroy the effectiveness of
their testimony. We cannot expect absolute uniformity in every detail because witnesses react
differently to what they see and hear, depending upon their situation and state of mind. Complete
uniformity in details is a badge of untruthfulness. The light contradictions, on the other hand,
strengthens the sincerity of the testimony of the witnesses."

Thus, far from evidence of falsehood, the minor inconsistency between the testimonies could justifiably be
regarded as a demonstration of their good faith.
The strongest part of the defense arguments concerns the identification of the appellants as the perpetrators of the
crime considering the lighting condition inside the jeepney. Appellants believed that they could not have been
recognized because both Grace and Glory admitted that the place was dark, and so surmised that it would have been
darker inside the jeepney because the eyewitnesses failed to point out the source of light therein. 33However, in trying to
prove their allegation, appellants unwittingly brought out details via Grace's testimony which demolish their surmise.
Thus:
Q.

Despite the darkness, you were able to identify the gun?

A.
I did not say it was completely dark. I said in the jeepney it was quite lighted. I said it was dark outside
but in the jeepney, it was quite lighted. 34 (Emphasis supplied.)
It seems, moreover, that appellants only quoted portions of the testimonies of Grace and Glory to suit their purpose.
Had the appellants been candid enough, they would have retained portions of the same testimonies evidencing that it
was the place where the jeepney was passing through that was dark but, inside the jeepney, it was "medium light".
Grace had testified on cross-examination as follows:
Q.

Will you mention again the exact location of the alleged incident?

A.

I am not familiar with the streets, sir. It was after a bridge. After UERM, sir.

Q.

What was the condition of the place at that time?

A.

It was moderately dark. Quite lighted. Medium.

Q.

How about inside the passenger jeepney? Was it lighted?

A.

Medium, sir. Since it was dark, you cannot have a complete light there.

Q.

It was quite dark?

A.

Yes, sir. 35

Q.

You mean the exact place where you were held-up is a dark place?

A.

Yes, sir. 36 (Emphasis supplied.)

Visibility is an important factor in the identification of a criminal offender. However, its relative weight and significance
depends largely on the attending circumstances and the discretion of the trial court. 37 Another overriding consideration
is the fact that the most natural reaction of victims of violence is to see the appearance of the perpetrator of the crime
and observe the manner in which the crime was being committed. 38
In the case before us, Grace's unrebutted testimony is that the jeepney was "quite lighted . . . medium". Even granting
that the light was dim as most jeepneys have colored or low-wattage bulbs for the passenger area, the added
illumination from the headlights of passing vehicles traveling the busy Aurora Boulevard would have been sufficient to
permit positive identification of the appellants. 39 Moreover, identification of the appellants as the hold-uppers was
facilitated by their physical proximity to the said eyewitnesses. Grace was seated beside appellant Mendoza while Glory
was beside Rejali. That Grace had poor eyesight does not affect her positive identification of Mendoza because she was
wearing her eyeglasses when the hold-up took place. 40 As stated above, because they were victims of violence, both
Grace and Glory must have had the appellants' features indelibly imprinted in their minds.
In light of the positive identification of the appellants as the perpetrators of the crime, their alibis are
worthless. 41Moreover, the defense failed to meet the requisites for alibi to be considered as a valid defense. It is not
enough that the appellants were somewhere else when the crime transpired. They must likewise duly establish that they
were so far away that it was not physically possible for them to be present at the crime scene or its immediate vicinity at
or about the time of its commission. 42 Balic-balic in Sampaloc, Manila and Aurora Boulevard in San Juan, Metro Manila
are not very distant from each other considering the numerous public transportation facilities plying between said
places.
But, while there is proof beyond reasonable doubt to lay culpability on the appellants for the killing of Ma. Ramilyn
Zulueta, the physical injuries sustained by her sister Grace and the asportation of Glory Oropeo's thirty pesos, we do not
agree with the trial court that the crime committed by appellants is covered by P.D. No. 532.
In its Decision, the trial court curtly said:

For her part, Glory testified on cross-examination in this wise:

Q.

Madam witness, will you mention again the exact location where you said you were allegedly held up?

A.

San Juan, H. Lozada and J. Ruiz St., sir.

Q.

What was the condition of that place at that time?

A.

It was dark because it was already nighttime.

14 | P a g e

The Court finds all the elements of the offense charged, namely, intent to gain, unlawful taking of property of
another, (the P30.00 of Glory Oropeo) violence against or intimidation of any person, on a Philippine Highway
and death of Ramilyn Zulueta and physical injuries upon Ma. Grace Zulueta, (Section 2, par. 3 and Section 3,
par. b, Anti-Piracy and Anti-Highway Robbery Law of 1974, Pres. Decree No. 532) have been duly proved in
the instant case.
Highway Robbery or Robbery with Homicide?
Conviction under P.D. No. 532 requires not only the above elements mentioned by the court a quo. Highway robbery or
brigandage is defined by Section 2 of said decree as follows:
e. Highway Robbery/Brigandage. The seizure of any person for ransom, extortion or other unlawful purposes,
or the taking away of the property of another by means of violence against or intimidation of person or force
upon things or other unlawful means, committed by any person on any Philippine highway.

In People vs. Puno 43, this Court, speaking through the learned Mr. Justice Florenz D. Regalado, explained the purpose
of brigandage as follows:
In fine, the purpose of brigandage is inter alia, indiscriminate highway robbery. If the purpose is only a
particular robbery, the crime is only robbery, or robbery in band if there are at least four armed participants.
(citing U.S. vs. Feliciano, 3 Phil. 422 [1904].) . . .
. . . Presidential Decree No. 532 punishes as highway robbery or brigandage only acts of robbery perpetrated
by outlaws indiscriminately against any person or persons on Philippine highways as defined therein, and not
acts of robbery committed against only a predetermined or particular victim, . . .
Consistent with the above, to obtain a conviction for highway robbery, the prosecution should have proven that the
accused, in the instant case, were organized for the purpose of committing robbery indiscriminately. There, however,
was a total absence of such proof. There was also no evidence of any previous attempts at similar robberies by the
accused to show the "indiscriminate" commission thereof.
Incidentally, it would be relevant to add that the number of perpetrators is no longer an essential element of the crime of
brigandage as defined by P.D. No. 532. Mr. Justice Regalado explained this in Puno:
True, Presidential Decree No. 532 did introduce amendments to Articles 306 and 307 of the Revised Penal
Code by increasing the penalties, albeit limiting its applicability to the offenses stated therein when committed
on the highways and without prejudice to the liability for such acts if committed. Furthermore, the decree does
not require that there be at least four armed persons forming a band of robbers; and the presumption in the
Code that said accused are brigands if they use unlicensed firearms no longer obtains under the decree. . . .44
Under the old doctrine, brigandage was committed by a "cuadrilla" 45 or by "more than three armed persons" per the
definition of brigands in Article 306 of the Revised Penal Code. 46
Even before the Puno holding, however, there had been cases 47 where less than four offenders were held guilty of
highway robbery under P.D. No. 532, which just strengthens the view that the number of offenders is not an essential
element in the crime of highway robbery. 48
It is possible that since Aurora Boulevard is a high way within the purview of P.D. No. 532, 49 the prosecutors deemed it
proper to charge appellants with violation of said decree. In this regard, the Puno ruling is enlightening. This Court held:
. . . (i)t would be absurd to adopt a literal interpretation that any unlawful taking of property committed on our
highways would be covered thereby. It is an elementary rule of statutory construction that the spirit or intent of
the law should not be subordinated to the letter thereof. Trite as it may appear, we have perforce to stress the
elementary caveat that he who considers merely the letter of an instrument goes but skin deep into its
meaning, and the fundamental rule that criminal justice inclines in favor of the milder form of liability in case of
doubt.
If the mere fact that the offense charged was committed on a highway would be the determinant for the
application of Presidential Decree No. 532, it would not be far-fetched to expect mischievous, if not absurd,
effects on the corpus of our substantive criminal law. While we eschew resort to a reductio ad absurdum line
of reasoning, we apprehend that the aforestated theory adopted by the trial court falls far short of the
desideratum in the interpretation of laws, that is, to avoid absurdities and conflicts. For, if a motor vehicle,
either stationary or moving on a highway, is forcibly taken at gunpoint by the accused who happened to take
15 | P a g e

a fancy thereto, would the location of the vehicle at the time of the unlawful taking necessarily put the offense
within the ambit of Presidential Decree No. 533, thus rendering nugatory the categorical provisions of the
Anti-Carnapping Act of 1972? And, if the scenario is one where the subject matter of the unlawful asportation
is large cattle which are incidentally being herded along and traversing the same highway and are impulsively
set upon by the accused, should we apply Presidential Decree No. 532 and completely disregard the explicit
prescriptions in the Anti-Cattle Rustling Law of 1974? 50
Hence, in charging a crime under P.D. No. 532, it is important to consider whether or not the very purpose for which the
law was promulgated has been transgressed. Citing the "whereas clauses" of P.D. No. 532 51 in Puno, the Court said:
Indeed, it is hard to conceive of how a single act of robbery against a particular person chosen by the
accused as their specific victim could be considered as committed on the "innocent and defenseless
inhabitants who travel from one place to another," and which single act of depredation would be capable of
"stunting the economic and social progress of the people" as to be considered "among the highest forms of
lawlessness condemned by the penal statutes of all countries," and would accordingly constitute an obstacle
"to the economic, social, educational and community progress of the people," such that said isolated act
would constitute the highway robbery or brigandage contemplated and punished in said decree. This would
be an exaggeration bordering on the ridiculous. 52
Petty robbery in public transport vehicles (with or without personal violence and death) committed against the middle
and lower economic classes of society is as reprehensible as (if not more so than) large-scale robbery committed
against the economically well-heeled. Nonetheless, the law must be interpreted not only to bring forth its aim and spirit
but also in light of the basic principle that all doubts are to be resolved liberally in favor of the accused. As such,
appellants may not be held liable under P.D. No. 532 but only under the provisions of the Revised Penal Code.
In the interpretation of an information, what controls is not the designation but the description of the offense
charged. 53 Considering the allegations of the aforequoted Information, appellants herein should be liable for the special
complex crime of robbery with homicide under Art. 294 of the Revised Penal Code, robbery having been duly
established beyond reasonable doubt by the asportation of thirty pesos from Glory Oropeo. It is immaterial that Ramilyn
Zulueta's death was accidental because it was produced by reason or on the occasion of the robbery. 54 The physical
injuries inflicted upon Grace Zulueta during the commission of the crime are absorbed in the crime of robbery with
homicide. 55
Conspiracy was duly proven by the coordinated actions of the appellants and their companion 56 of depriving Glory of
her money and injuring both Ramilyn and Grace which resulted in Ramilyn's accidental death. Since both appellants
took part in the robbery, they shall be liable for the complex crime of robbery with homicide in the absence of proof that
they endeavored to prevent the accidental killing of Ramilyn. 57 In view of the prohibition against the imposition of the
death penalty when the crime was committed, the penalty of reclusion perpetua was then the single and indivisible
penalty for robbery with homicide. It shall be imposed on each of the appellants regardless of the mitigating and
aggravating circumstances attending the commission of the crime. 58
WHEREFORE, the Decision of the Regional Trial Court of Pasig, Metro Manila (Branch 156) in Crim. Case No. 87218 is
hereby MODIFIED. Appellants Romeo Mendoza y Reyes and Jaime Rejali y Lina are hereby found GUILTY beyond
reasonable doubt of the special complex crime of robbery with homicide and accordingly, each of them is hereby
sentenced to suffer the penalty of reclusion perpetua. The other portions of the trial court's decision, including the
monetary awards imposed against them, are AFFIRMED. Costs against appellants.
SO ORDERED.

G.R. No. L-46306 February 27, 1979

order dated March 31, 1977. A motion for reconsideration petition was filed but was denied by respondent Judge in an
order dated May 19, 1977.

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. MARIANO C. CASTAEDA, JR., as Judge of the Court of First Instance of Pampanga, Branch III, and
BENJAMIN F. MANALOTO, respondents.

Hence, this petition for certiorari file by the office of the Provincial Fiscal, on behalf of the People of the Philippines,
seeking set aside the aforesaid order of the respondent Judge and praying that a preliminary injunction or a ternporary
restraining order be issued by this Court enjoining said judge from further proceeding with the trial of aforesaid Criminal
Case No. 1011.

Fiscal Regidor Y Aglipay and Special Counsel Vicente Macalino for petitioner.

On June 20, 1977, this Court resolved (a) to issue a temporary restraining order, and (b) to require the Solicitor
General to appear as counsel for the petitioner. 3 The Office of the Solicitor General filed its Notice of Appearance on
June 27, 1977, 4 and its Memorandum in support of the Petition on August 30, 1977. 5 The respondents filed their
Memorandum on September 5, 1977. 6 Whereupon, the case was considered submitted for decision. 7

Moises Sevilla Ocampo for private petitioner.

Cicero J. Punzalan for respondent.

SANTOS, J.:
On the basis of the complaint 1 of his wife, Victoria M. Manaloto, herein private respondent Benjamin Manaloto was
charged before the Court of First Instance of Pampanga, presided by respondent Judge, Hon. Mariano C. Castaneda
Jr., with the crime of Falsification of Public Document committed, according to the Information, as follows:
That on or about the 19th day of May, 1975, in the Municipality of San Fernando, province of
Pampanga, Philippines, and within the jurisdiction of this Honorable Court, the above-named a
BENJAMIN F. MANALOTO, with deliberate intent to commit falsification, did then and there willfully,
unlawfully and feloniously counterfeit, imitate and forge the signature of his spouse Victoria M.
Manaloto in a deed of sale executed by said accused wherein he sold a house and lot belonging to
the conjugal partnership of said spouse in favor of Ponciano Lacsamana under Doc. No. 1957,
Page No. 72, Book No. LVII, Series of 1975, notarized by Notary Public Abraham Pa. Gorospe,
thereby making it appear that his spouse Victoria M. Manaloto gave her marital consent to said
sale when in fact and in truth she did not. 2
At the trial, the prosecution called the complaint-wife to the witness stand but the defense moved to disqualify her as a
witness, invoking Sec. 20, Rule 130 of the Revised Rules Of Court which provides:
SEC. 20. Disqualification by reason of interest or relationship The following persons cannot
testify as to matters in which they are interested, directly or indirectly as herein enumerated.
xxx xxx xxx
(b) A husband can not be examined for or at his wife without her consent; nor a wife for or against
her husband without his consent, except in a civil case by one against the other or in a criminal
case for a crime committed by one against the other.
The prosecution opposed said motion to disquality on the ground that the case falls under the exception to the rule,
contending that it is a "criminal case for a crime committed by one against the other." Notwithstanding such opposition,
respondent Judge granted the motion, disqualifying Victoria Manaloto from testifying for or against her husband, in an
16 | P a g e

From the foregoing factual and procedural antecedents emerges the sole issues determinative of the instant petition, to
wit: Whether or not the criminal case for Falsification of Public Document filed against herein private respondent
Benjamin F. Manaloto who allegedly forged the signature of his wife, Victoria M. Manaloto, in a deed of sale, thereby
making it appear that the latter gave her marital consent to the sale of a house and lot belonging to their conjugal
partnership when in fact and in truth she did not may be considered as a criminal case for a crime committed by a
husband against his wife and, therefore, an exception to the rule on marital disqualification.
We sustain petitioner's stand that the case is an exception to the marital disqualification rule, as a criminal case for a
crime committed by the accused-husband against the witness-wife.
1. The act complained of as constituting the crime of Falsification of Public Document is the forgery by the accused of
his wife's signature in a deed of sale, thereby making it appear therein that said wife consented to the sale of a house
and lot belonging to their conjugal partnership when in fact and in truth she did not. It must be noted that had the sale of
the said house and lot, and the signing of the wife's name by her husband in the deed of sale, been made with the
consent of the wife, no crime could have been charged against said husband Clearly, therefore, it is the husband's
breach of his wife's confidence which gave rise to the offense charged. And it is this same breach of trust which
prompted the wife to make the necessary complaint with the Office of the Provincial Fiscal which, accordingly, filed the
aforesaid criminal case with the Court of First Instance of Pampanga. To rule, therefore, that such criminal case is not
one for a crime committed by one spouse against the other is to advance a conclusion which completely disregards the
factual antecedents of the instant case.
2. This is not the first time that the issue of whether a specific offense may be classified as a crime committed by one
spouse against the other is presented to this Court for resolution. Thus, in the case of Ordoo v. Daquigan, 8this Court,
through Mr. Justice Ramon C. Aquino, set up the criterion to be followed in resolving the issue, stating that:
We think that the correct rule, which may be adopted in this jurisdiction, is that laid down in Cargill v. State, 35 ALR, 133,
220, Pac 64,26 OkL 314, wherein the court said:
The rule that the injury must amount to a physical wrong upon the is too narrow; and the rule that
any offense remotely or indirectly affecting domestic 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 committed (by) one
against the other.

Applying the foregoing criterion in said case of Ordoo v. Daquigan this Court held that the rape committed by the
husband of the witness-wife against their daughter was a crime committed by the husband against his wife. Although
the victim of the crime committed by the accused in that can was not his wife but their daughter, this Court,
nevertheless, applied the exception for the reason that said criminal act "Positively undermine(d) the connubial
relationship. 9
With more reason must the exception apply to the instant case where the victim of the crime and the person who stands
to be directly prejudiced by the falsification is not a third person but the wife herself. And it is undeniable that the act
comp of had the effect of directly and vitally impairing the conjugal relation. This is apparent not only in the act Of the
wife in personally lodging her complaint with the Office of the Provincial Fiscal, but also in her insistent efforts 10 in
connection with the instant petition, which seeks to set aside the order disqualified her from testifying against her
husband. Taken collectively, the actuations of the witness-wife underacore the fact that the martial and domestic
relations between her and the accused-husband have become so strained that there is no more harmony to be
preserved said nor peace and tranquility which may be disturbed. In such a case, as We have occasion to point out in
previous decisions, "identity of interests disappears and the consequent danger of perjury based on that Identity is
nonexistent. Likewise, in such a situation, the security and confidence 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. 11 Thus, there is no
reason to apply the martial disqualification rule.
3. Finally, overriding considerations of public policy demand that the wife should not be disqualified from testifying
against her husband in the instant case. For, as aptly observed by the Solicitor General," (t)o espouse the contrary view
would spawn the dangerous precedent of a husband committing as many falsifications against his wife as he could
conjure, seeking shelter in the anti-marital privilege as a license to injure and prejudice her in secret all with
unabashed and complete impunity.
IN VIEW OF ALL THE FOREGOING, the order of the lower court dated March 31, 1977, disqualifying Victoria Manaloto
from testifying for or against her husband, Benjamin Manaloto, in Criminal Case No. 1011, as well as the order dated
May 19, 1977, denying the motion for reconsideration are hereby SET ASIDE. The temporary restraining order issued
by this Court is hereby lifted and the respondent Judge is hereby ordered to proceed with the trial of the case, allowing
Victoria Manaloto to testify against her husband.
SO ORDERED.

17 | P a g e

G.R. No. L-568

July 16, 1947

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
JUAN FRANCISCO, defendant-appellant.
Augusto Kalaw for appellant.
Assistant Solicitor General Roberto A. Gianzon and Acting Solicitor Isidro C. Borromeo for appellee.
HILADO, J.:
Convicted of the crime of parricide by the Court of First Instance of Mindoro, Juan Francisco appeals to this Court and
asks us to reverse the decision of the trial court and to acquit him of the crime charged.
On March 4, 1945, defendant, who had been previously arrested on charges of robbery, was being held as detention
prisoner in the municipal jail of Mansalay, Mindoro. On that date he requested permission from the chief of police, and
he was allowed to go with Sergeant Pacifico Pimentel, who was detailed to guard him. Upon their reaching the house,
the sergeant allowed the prisoner to see his wife who was at the time in a room of said house, while said sergeant
remained at the foot of the stairs. After a few moments, Pimentel heard the scream of a woman. Running upstairs, he
met defendant's wife running out of the room and holding her right breast which was bleeding. Still moments later,
Pimentel saw defendant lying down with his little son Romeo, aged one year and a half, on his breast. Pimentel also
found defendant to have a wound in his belly while his child had a wound in the back. Pimentel found the child dead.
The prosecution, in recommending the imposition of the capital penalty upon the accused, relies mainly on: (1) the
affidavit, Exhibit C (translation, Exhibit C-1), which is a virtual confession of the accused; (2) Exhibit D, which is the
record made by the justice of the peace of Mansalay of the arraignment of the defendant upon which the latter entered a
plea of guilty; and (3) the rebuttal testimony of Emilia Taladtad, wife of the appellant.
Exhibit C is an affidavit signed and sworn to by the appellant before the justice of the peace of Mansalay on March 5,
1945,. Exhibit C-1 is its English translation. In said affidavit appellant declares that: "I asked permission from the chief of
police so that I may be able to raise my bond and to indicate to me the house of one Guillermo Gervasio, a policeman,
and I was consented and the sergeant of police accompanied me to my house; that upon arriving at the house, Sgt.
Pacifico Pimentel allowed me to go up in order that I may be able to talk to my wife and the sergeant of police awaited
me in the stairs of the house; when I was in the house, I remembered what my uncle told me to the effect that he would
order someone to kill me because I am a shame and a dishonor to our family and suddenly I lost my sense and I
thought to myself that if someone would kill me it would be more preferable for me to kill myself; when I looked at the
bed I saw a scissor near my wife and unconsciously I picked up the said scissor and immediately stabbed my wife
whereupon I looked for my child on the bed and stabbed him; I killed my son Romeo Francisco whose age is more or
less two years and after that I stabbed myself; after stabbing myself, I heard a shot and the sergeant of police asked me
if I would surrender to him or not; I replied him "yes" then I lost my consciousness."
Sergeant of Police Pimentel, whose veracity we find in the evidence no reason to doubt, declared (p. 6, t.s.n., Lunar)
that the accused confessed to him that because he was already tired or disgusted with his life "on account of the
accusation of his father-in-law" against him, he wanted to wipe out his family by stabbing his wife, his son and himself,
and killing the three of them. The same witness also stated (p. 9, ibid.) that the accused confessed to him that he
stabbed his wife, his child and himself because he was ashamed, as his father-in-law told him that he should rather die
than live in shame for having dishonored the family of his wife.
18 | P a g e

The voluntariness and spontaniety of the confession contained in Exhibit C was testified to by the justice of the peace of
Mansalay and police sergeant Pimentel, one Sebastian Punzalan, and the chief of police Alfredo Iwahi; that said justice
of the peace had previously read the contents of the same affidavit to the accused and that the accused signed without
any intimidation having been exerted in the presence of said justice of the peace; that the accused signed voluntarily in
the session hall of the justice of the peace court in Barrio Paclasan (pp. 26-27, ibid.) Pimentel testified, upon the same
point, that no force was exerted upon appellant to state what is contained in the affidavit; that he had not maltreated or
boxed the accused as pretended by the latter; that the contents of the exhibit were read to the accused; that he did not
threatened the accused to shoot the latter if he would not swear to Exhibit C before the justice of the peace, as declared
by said accused (pp. 25-26, ibid.) In this connection we note from the testimony of the accused himself that on the way
to the house of the justice of the peace after the incident, he was being helped by the chief of police Iwahi when,
according to him, Sergeant Pimentel told him that he was going to swear to the contents of Exhibit C and that if he
would not do so Pimentel would shoot him (p. 17, ibid.); that (the same accused assured the court) Iwahi treated him
well (t.s.n., p. 20, ibid.); and really from the entire testimony of this accused the good treatment accorded him by Chief
of Police Iwahi is clearly discernible. He was under preventive detention in the house of Iwahi and it was Iwahi who
suggested or told him, after he had killed and dressed the former's pig, that he bring a kilo of the meat to his
(appellant's) wife (p. 13, ibid.) It was also Iwahi who allowed him to go to his house on the same occasion for the
purposes of the procurement of his bail (p. 13, ibid.).
Under these circumstances, besides the complete absence of proof of any reason or motive why Pimentel should so
threaten the accused, we find the accused's version incredible. On page 16 of the same transcript, answering a
question by the Court of First Instance, the accused testified that he understands English and the translation Exhibit C-1
of the affidavit Exhibit C is in that language.
Other indications of appellant's lack of trustworthiness are: While on page 14 of said transcript he testified that he was
the only one who went to the house of his wife because Pimentel, according to him, remained in the house of Roberto
Magramo, on page 13 he declared that he was accompanied by the sergeant of police of Mansalay, Pacifico Pimentel to
the house of his wife and that the chief of police ordered Pimentel to so accompany him. Contradicting the same
pretension of his having gone alone to his wife's house is his own testimony on page 17 of the transcript wherein he
assured affirmatively the question of his own counsel whether Pimentel was the policeman who was with him to guard
him on the occasion of his going to his wife's house; and really, while he imputed upon his wife the wounding of their
child, who died as a consequence thereof, he admitted that he did not tell this to the justice of the peace of Mansalay (p.
18, ibid.), and the reason he assigned for this passive conduct on his part to the effect that he was afraid of Pimentel (p.
19, ibid.) is patently unacceptable, for no motive whatsoever has been established to make us believe that the accused
had reasons to be so afraid of Pimentel. Appellant's testimony to the effect that Pacifico Pimentel was testifying against
him because Pimentel "being my guard that time he might be held responsible for allowing me to go alone" (p. 17, ibid.)
is absolutely without merit. This testimony clearly reveals a desire to show that because Pimentel allowed the accused
to go up the house while the former stayed at the foot of the stairs, said Pimentel would be responsible for what had
happened unless the accused was the one who killed the child and wounded his wife rather than the wife having
accidentally wounded the child and killed him and been stabbed by the accused, who also stabbed himself. As we said
a moment ago, we do not give any merit to this purpose in testifying against the accused to relieve himself of all
responsibility for what had happened, it would have been more conducive to this result if Pimentel had testified that it
was not the accused, whom he had allowed to go upstairs unguarded, who was guilty, but his wife, of the wounding of
the child, and that the accused wounded his wife only as the result of the obfuscation produced by the child's death. And
the fact that Pimentel gave the version which might place no small blame on him for allowing the accused to go up the
house alone, gives special weight to his testimony.
This case, as developed by the evidence for the prosecution, which has not been destroyed nor enervated by that of the
defense, presents a truly strange happening. But the fact of the commission of the crime of parricide appears to us to
have been established beyond reasonable doubt. As to the reasons impelling the commission of the act, the case is a
strange one and admittedly not common. But while it is not necessary even to prove motive in case the commission of

the crime is established as required by law (U.S. vs. Ricafor, 1 Phil., 173; U.S. vs.McMann, 4 Phil., 561; U.S. vs. Reyes,
18 Phil., 495; U.S. vs. Balmori and Apostol, 18 Phil., 578), here we have a case of a crime proven beyond reasonable
doubt, not absolutely without a proven motive, but with proof of a motive testified to by the accused himself in his
confession, strange though it be. But at times "truth is stranger than fiction," and it so happens here. The law must be
applied to the facts.
We have scanned and searched the evidence and the record diligently for facts and circumstances which might
sufficiently establish insanity or any allied defense, but we have failed to find them.
As we construe the evidence, we believe that Exhibit C contains the truth, as narrated by the accused himself who, at
the time of making it, must have been moved only by the determination of a repentant father and husband to
acknowledge his guilt for facts which, though perhaps done under circumstances productive of a diminution of the
exercise of will-power, fell short of depriving the offender of consciousness of his acts. We will have occasion to further
consider this aspect of the case later.
Exhibit C was signed and sworn to by appellant the day following the fatal event. Presumably, on making this confession
appellant had not yet had time to reflect upon the consequences of such a confession to himself egoism was not yet
allowed to operate against the promptings of his conscience. But when on February 23, 1946 almost one year after
this man testified in his own defense in the Court of First Instance, he already had had ample opportunity to reflect
upon those consequences. And what happened? As in similar cases, he repudiated his confession, and alleged torture
and violence to have been exerted upon his person and his mind in order, so he now pretends, to extract it from him. As
we find the confession to have been given voluntarily, we feel justified in concluding that its subsequent repudiation by
the accused almost a year after must have been due to his fear of its consequences to himself, which he not improbably
thought might cost him his own life. It was the struggle between the noble and the ignoble in the man, and the latter,
aided by instinct of self-preservation, won.
Defense counsel attacks the value of Exhibit C as evidence of guilt for the reason that the statements contained therein
were not, counsel contends, given spontaneously but through use of violence and intimidation. He also questions the
admissibility of Exhibit D on the ground that it has not been properly identified; and, with more vigor and stronger
emphasis, he impugns the admissibility of the testimony of appellant's wife, invoking the provision of section 26 (d) of
Rule 123 prohibiting the wife and the husband from testifying for or against each other.
As to Exhibit C, this document was sworn to and subscribed by said accused before the justice of the peace of
Mansalay. This official testified that he asked the prisoner before the latter signed said exhibit whether he understood
the contents thereof, and that said latter answered in the affirmative. The witness further declared that appellant signed
the exhibit voluntarily and that said appellant said that the said affidavit was his (p. 10, ibid.). There is a total absence of
evidence, besides the testimony of appellant himself, to show that his statements contained in said exhibit were
extracted form him by the use of violence and intimidation. While we are not unaware of the practice resorted to by
some peace officers of extracting admissions or confessions from persons accused of crime by the employment of thirddegree methods, in the present case we fail to find from the evidence sufficient proof to destroy the categorical
testimony of the justice of the peace that Exhibit C was signed by appellant voluntarily and with a full understanding
thereof. Furthermore, the statements of appellant in said Exhibit C were corroborated by the testimony of his wife on
rebuttal. This leads us to the consideration of the admissibility of the wife's testimony.
The rule contained in section 265 (d) of Rule 123 is an old one. Courts and text-writers on the subject have assigned as
reasons therefor the following: First, identity of interest; second, the consequent danger of perjury; third, the policy of the
law which deems it necessary to guard the security and confidences of private life even at the risk of an occasional
failure of justice, and which rejects such evidence because its admission would lead to domestic disunion and
unhappiness; and fourth, because where a want of domestic tranquility exists, there is danger of punishing one spouse
19 | P a g e

through the hostile testimony of the other. This has been said in the case of Cargill vs. State (220 Pac., 64; 25 Okl. Cr.,
314; 35 A.L.R., 133), thus:
The reasons given by law text-writers and courts why neither a husband nor wife shall in any case be a
witness against the other except in a criminal prosecution for a crime committed by one against the other
have been stated thus: First, identity of interests; second, the consequent danger of perjury; third, the policy
of the law which deems it necessary to guard the security and confidences of private life even at the risk of an
occasional failure of justice, and which rejects such evidence because its admission would lead to domestic
disunion and unhappiness; and fourth, because, where a want of domestic tranquility exists, there is danger
of punishing one spouse through the hostile testimony of the other. (70 C.J., 119.)
However, as all other general rules, this one 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 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.
At any rate, in the instant case the wife did not testify in the direct evidence for the prosecution but under circumstances
presently to be stated. It will be noted that the wife only testified against her husband after the latter, testifying in his own
defense, imputed upon her the killing of their son. (p. 15, ibid.) By all rules of justice and reason this gave the
prosecution, which had theretofore refrained from presenting the wife as a witness against her husband, the right to do
so, as it did in rebuttal; and the the wife herself the right to so testify, at least, in self-defense, not of course, against
being subjected to punishment in that case in which she was not a defendant but against any or all of various possible
consequences which might flow from her silence, namely: (1) a criminal prosecution against her which might be
instituted by the corresponding authorities upon the basis of her husband's aforesaid testimony; (2) in the moral and
social sense, her being believed by those who heard the testimony orally given, as well as by those who may read the
same, once put in writing, to be the killer of her infant child. It has been aptly said that the law of evidence is the law of
common sense. Presuming the husband who so testified against his wife to be endowed with common sense, he must
be taken to have expected that the most natural reaction which the said testimony would give rise to on the part of the
prosecution, as well as of his wife, was to deny upon rebuttal the new matter which was involved in the same testimony,
namely, the imputation that it was his wife who killed their little son. Upon the part of the prosecution, because he not
only limited himself to denying that he was the killer, but went further and added what was really a new matter consisting
in the imputation of the crime upon his wife. And upon the part of the wife, because of the reasons already set forth
above. Hence, in giving such testimony, the husband must, in all fairness, be held to have intended all its aforesaid
natural and necessary consequences. By his said act, the husband himself exercising the very right which he would
deny to his wife upon the ground of their marital relations must be taken to have waived all objection to the latter's
testimony upon rebuttal, even considering that such objection would have been available at the outset.
At this point, it behooves us to emphasize the all-important role of the State in this case. 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 rebutting testimony in question, even against the objection of the accused,because it was the latter himself
who gave rise to its necessity. It may be said that the accused husband thought that he would have more chances of
convincing the court of his pretended innocence if he pointed to his wife as having caused the death of their child,
instead of simply denying that he was the author of the fatal act. To this we would counter by saying that if he was to be
allowed, for his convenience, to make his choice and thereby impute the act upon his spouse, justice would be partial
and one-sided if both the State and the wife were to be absolutely precluded from introducing the latter's rebutting
testimony.

As well-settled as this rule of marital incompetency itself is the other that it may be waived.
Waiver of incompetency. Objections to the competency of a husband or wife to testify in a criminal
prosecution against the other may be waived as in the case of the other witnesses generally. Thus, the
accused waives his or her privilege by calling the other spouse as a witness for him or her, thereby making
the spouse subject to cross-examination in the usual manner. It is well-established that where an accused
introduces his wife as a witness in his behalf, the state is entitled to question her as to all matters germane
and pertinent to her testimony on direct examination. It is also true that objection to the spouse's competency
must be made when he or she is first offered as witness, and that the incompetency may be waived by the
failure of the accused to make timely objection to the admission of the spouse's testimony, although knowing
of such incompetency, and the testimony admitted, especially if the accused has assented to the admission,
either expressly or impliedly. Other courts have held that the witness's testimony is not admissible even with
the other spouse's consent. Clearly, if the statute provides that a spouse shall in no case testify against the
other except in a prosecution for an offense against the other, the failure of the accused to object does not
enable the state to use the spouse as a witness. (3 Wharton's Criminal Evidence, 11th Ed., section 1205, pp.
2060-2061.)
Wharton, in note 10 at the foot of page 2060 of the cited volume refers us to section 1149 appearing on page 1988 of
the same volume, dealing with waiver objection to incompetency of witnesses in general. We transcribe this section for
convenient reference:
Waiver of objection to incompetency. A party may waive his objection to the competency of a witness and
permit him to testify. A party calling an incompetent witness as his own waives the incompetency. Also, if, after
such incompetency appears, there is failure to make timely objection, by a party having knowledge of the
incompetency, the objection will be deemed waived, whether it is on the ground of want of mental capacity or
for some other reason. If the objection could have been taken during the trial, a new trial will be refused and
the objection will not be available on writ of error. If, however, the objection of a party is overruled and the
ruling has been excepted to, the party may thereafter examine the witness upon the matters as to which he
was allowed to testify to without waiving his objections to the witness's competency. (Ibid., section 1149, p.
1988.)
It will be noted, as was to be expected, that in the last above-quoted section, the author mentions certain specific cases
where the courts concerned hold that there was waiver, but for obvious reasons neither the author nor said courts have
attempted to make an enumeration of all possible cases of waiver. In the very nature of things, it would be impossible to
make a priori such a complete enumeration and to say that it is exclusive. So long as the Legislature itself does not
make its own statutory and exclusive specification of cases of such waiver and we doubt that it ever will no
complete and exclusive enumeration can, nor should, be attempted by the courts, for in the absence of such legislation
the cases of waiver will be as indefinite in number as indefinite are and always will be the varying and unpredictable
circumstances surrounding each particular case.
To illustrate, Mr. Wharton says above that the accused waives his or her privilege by calling the other spouse as a
witness for him or her, thereby making the spouse subject to cross-examination in the usual manner, the reason being
that the State is entitled to question the spouse so presented as to all matters germane and pertinent to the direct
testimony. In the same way, and for a similar reason, when the herein appellant gave his testimony in question in his
defense, the State had the right to rebut the new matter contained in that testimony consisting in the imputation upon his
wife of the death of the little boy. And that rebuttal evidence, which was rendered necessary by appellant's own
testimony, could be furnished only by his wife who, as he fully knew, was alone with him and their son at the precise
place and time of the event. This right to rebut is secured to the State, no less than to the accused, by Rule 115, section
3, paragraph (c), the provision further authorizing the court, in furtherance of justice, to permit one or the other party to
20 | P a g e

offer "new additional evidence bearing upon the main issue in question." So that if the waiver that we here declare to
flow from the above-mentioned testimony of appellant does not happen to be among those which were mentioned in the
cases cited by Mr. Wharton, that is no reason against the existence of said waiver.
When the husband testified that it was his wife who caused the death of their son, he could not, let us repeat, justly
expect the State to keep silent and refrain from rebutting such new matter in his testimony, through the onlywitness
available, namely, the wife; nor could he legitimately seal his wife's lips and thus gravely expose her to the danger of
criminal proceedings against her being started by the authorities upon the strength and basis of said testimony of her
husband, or to bear the moral and social stigma of being thought, believed, or even just suspected, to be the killer of her
own offspring. A decent respect and considerate regard for the feelings of an average mother will tell us that such a
moral and social stigma would be no less injurious to her than a criminal punishment. And if the wife should, in such a
case and at such a juncture, be allowed to testify upon rebuttal, the scope of her testimony should at least be the same
as that of her husband. This is only simple justice and fairness dictated by common sense. Since the husband had
testified that it was his wife who caused the death of the little boy, she should be allowed to say that it was really her
husband who did it. We hold that it is not necessary, to justify such rebuttal evidence, and to declare the existence of the
waiver upon which it was based, that the wife be in jeopardy of punishment in the same case by reason of such
testimony of her accused husband. The rule of waiver of objection to the competency of witnesses generally does not
require this prerequisite in the case between husband and wife. Rather the rule makes the determination of the question
hinge around the consequences which by common sense, in justice and in fairness, should be deemed to have been
expected by the spouse who first testified naturally to flow from his act of giving that testimony. At any rate, the trial court
not only had the power to allow the State to utilize the wife as rebuttal witness, but also the discretion to permit "new
additional evidence bearing upon the main issue in question." But even restricting the wife's testimony to merely
contradicting her husband's version that she was the one who killed their child, there is evidence beyond reasonable
doubt that appellant was the killer. With the testimony of both spouses upon the point, instead of that of the accused
alone, let justice take its course.
As to Exhibit D, this document was a part of the record of the case in the justice of the peace of court which was
expressly presented by the prosecution as evidence in the Court of First Instance.
But after all has been said and done, in justice to the accused, we believe that, whether we are dealing with a simpleton
or an eccentric, or we have here one of those well-nigh inexplicable phenomena in human conduct where the judge
finds himself at a loss to discover an adequate motivation for the proven acts of the accused, indulging all reasonable
intendments in favor of appellant, we are of opinion that when he committed the crime charged against him he must
have been suffering from some illness (of the body, the mind, the nerves, or the moral faculty) as is contemplated in
paragraph 9 of article 13 of the Revised Penal Code as a mitigating circumstance, namely, "such illness of the offender
as would diminish the exercise of the will-power of the offender without however depriving him of consciousness of his
acts."
Article 246 of the Revised Penal Code punishes parricide by the penalty of reclusion perpetua to death. Article 63,
paragraph 3, of the same code, provides that when the commission of the act is attended by some mitigating
circumstance and there is no aggravating circumstance, and the law prescribes a penalty composed of two indivisible
penalties, the lesser penalty shall be applied; in this case, in view of the above indicated circumstance and there being
no aggravating circumstance, the lesser penalty is reclusion perpetua, which was the penalty correctly applied by the
trial court, which penalty, of course, carries with it the accessory penalties provided for in article 41 of the said Code.
The accused should also be sentenced to indemnify the heirs of the deceased Romeo Francisco in the sum of P2,000,
and to pay the costs.
As above modified, the appealed judgment is affirmed, with costs against appellant. So ordered.

G.R. No. L-25643

June 27, 1968

JOSE MANUEL LEZAMA and PAQUITA LEZAMA, petitioners,

vs.
HON. JESUS RODRIGUEZ, Judge of the Court of First Instance of Iloilo,
JOSE DINEROS, in his capacity as Receiver of the LA PAZ ICE PLANT and COLD STORAGE CO., INC., and THE
HON. COURT OF APPEALS, respondents.
Efrain B. Trenas and Sergio D. Mabunay for petitioners.
Ricardo J. Gerochi for respondents.
CASTRO, J.:
The issue tendered for resolution in this case is whether a wife, who is a co-defendant of her husband in an action, may
be examined as a hostile witness by the adverse party under section 6 of Rule 132 of the Rules of Court, without
infringing on her marital privilege not to testify against her husband under section 20 (b) of Rule 130. The trial court,
presided by the respondent Judge Jesus Rodriguez, ruled in the affirmative and required the wife to appear and testify.
The petitioners sued for certiorari but the Court of Appeals dismissed their petition1 and denied their motion for
reconsideration.2 Hence this appeal.3
On July 18, 1960 Jose S. Dineros, acting as receiver of the La Paz Ice Plant & Cold Storage Co. in Iloilo, together with
C.N. Hodges and Ricardo Gurrea, filed an action in the Court of First Instance of Iloilo for the annulment of a judgment
rendered against the La Paz Ice Plant by the Court of First Instance of Manila in civil case 39827. Named as defendants
were Marciano C. Roque, in whose favor judgment was rendered, and the spouses Jose Manuel and Paquita Lezama.
The complaint alleged that, because of mismanagement by the Lezamas, the La Paz Ice Plant was placed under the
receivership of Dineros; that during the pendency of the receivership, Marciano C. Roque brought an action against the
La Paz Ice Plant in the Court of First Instance of Manila for the collection of P150,000, which sum he had supposedly
lent to it; that summons was served not on the receiver but on the spouses Jose Manuel and Paquita Lezama; and that,
through the collusion of the Lezamas, Roque was able to obtain judgment by default against the company. It was
claimed that, because the summons was served on Jose Manuel Lezama instead of on the receiver, the Court of First
Instance of Manila acquired no jurisdiction over the La Paz Ice Plant and that, therefore, the decision of that court was
void.1vvphi1.nt
In their answer, the defendant spouses (the herein petitioners), while admitting that the company was placed under
receivership, maintained that Jose Manuel Lezama nevertheless remained president of the La Paz Ice Plant and that as
such he had authority to receive in behalf of the company the court summons in civil case 39827. They denied entering
into collusion with Roque and averred that they did not contest Roque's claim because they knew it to be a legitimate
obligation which the La Paz Ice Plant had incurred pursuant to a resolution of its board of directors.
Issues having been joined, the case was thereupon heard. At the hearing Dineros asked the court to issue
asubpoena to Paquita Lezama to testify as "a witness summoned by the plaintiffs in accordance with the Rules of
Court." The request was granted over the objection of the petitioners who invoked the following provision of the Rules of
Court:
A husband cannot be examined for or against his wife without her consent; nor a wife for or against her
husband without his consent, 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 in a criminal case for a crime committed by one against the other. 4
21 | P a g e

This provision deals with two different matters which rest on different grounds of policy: the disqualification of husband
and wife to testify in each other's behalf, as well as their privilege not to testify against each other.5 The fundamental
theory of the common law is said to be that relationship of the spouses, not their pecuniary interest, is the basis of the
disqualification.6 Indeed section 20 of Rule 130 is entitled "Disqualification by reason of ... relationship."
On the other hand, while a shelter of emotional reasons has been offered7 for the privilege, the "true explanation [which]
is after all the simplest"8 and which constitutes "the real and sole strength of the opposition to abolishing the privilege,"
is the natural repugnance in every fair-minded person to compelling a wife or husband to be the means of the other's
condemnation and to subjecting the culprit to the humiliation of being condemned by the words of his intimate life
partner.9
Here the request for subpoena indicated that Paquita Lezama was to do no more than testify as an adverse party in the
case and, indeed, in the light of the allegations both in the complaint and in the answer, the request was apparently one
that could reasonably be expected to be made. Thus, the complaint charged
13. That in obtaining the judgment by default in Civil Case No. 39827 of the Court of First Instance of
Manila against the La Paz Ice Plant & Cold Storage Co., Inc. defendants, in gross and evident bad faith, and
in fraudulent conspiracy, made it appear that the La Paz Ice Plant & Cold Storage Co., Inc. had obtained a
loan of P150,000.00 from defendant Marciano C. Roque thru defendant Jose Manuel Lezama allegedly upon
an authority vested upon defendant Jose Manuel Lezama by the alleged Board of Directors of the La Paz Ice
Plant & Cold Storage Co., Inc. allegedly evidenced by the minutes of the meetings of the Board of Directors
of the said corporation signed by defendant Jose Manuel Lezama and attested to by Benjamin Luis Borja and
Paquita B. Lezama and that defendants spouses Jose Manuel Lezama and Paquita B. Lezama had
manipulated the books of the corporation by making it appear that such fictitious loan was then in existence.
On the other hand, the answer claimed
13. That the herein defendants specifically deny all the allegations contained in paragraph 13 of the
complaint; the truth is, that the herein defendants have not conspired and acted in bad faith with the plaintiff
[Marciano C. Roque] in Civil Case No. 39827 of the Court of First Instance of Manila for the rendition of the
said judgment referred to therein; for the truth is, that the herein defendants, in their capacities as PresidentManager and Secretary of the La Paz Ice Plant & Cold Storage Co., Inc., believing as they believe that the
obligation sought to be enforced by said civil action being legitimate and the allegations of the complaint in
said Civil Case No. 39827 of the Court of First Instance of Manila are true, they did not deem it wise to
contest the same; that the obligation of P150,000.00 of the La Paz Ice Plant & Cold Storage Co., Inc., which
the defendant Marciano C. Roque sought to be enforced in Civil Case No. 39827 of the Court of First
Instance of Manila was legitimately contracted in accordance with law; that said obligation was duly entered
in the books of the corporation and that the said loan is not fictitious; that the amount realized therefrom was
spent for the benefit of the said corporation.
Thus, while the petitioners denied the charge that the loan was fictitious, they did not deny the allegation that it was
Paquita Lezama who, as secretary of the company, signed the minutes of the meeting at which Jose Manuel Lezama
was allegedly authorized to negotiate the loan and that it was she who, likewise as secretary, made the entry in the
books of the corporation.
It was obviously to test the truth of the assertion that the loan transaction was above board that Dineros, the company
receiver, wanted Paquita Lezama on the witness stand, not as a spouse witness "for or against her husband," but rather
as an adverse party in the case.

It is postulated that a party can make, as it were, such forays into his opponent's position on the strength of section 6 of
Rule 132 which provides:
Direct examination of unwilling or hostile witnesses. A party may interrogate any unwilling or hostile
witness by leading questions. A party may call an adverse party or an officer, director, or managing agent of a
public or private corporation or of a partnership or association which is an adverse party, and interrogate him
by leading questions and contradict and impeach him in all respects as if he had been called by the adverse
party and the witness thus called may be contradicted and impeached by or on behalf of the adverse party
also, and may be cross-examined by the adverse party only upon the subject-matter of his examination in
chief.
The basic issue may therefore be restated thus: In this case where the wife is a co-defendant in a suit charging fraud
against the spouses, can the wife be compelled to testify as an adverse party witness concerning her participation in the
alleged fraud without violating section 20 (b) of Rule 130?
It is argued that the wife may be so compelled but her testimony would be receivable only against her. 10 It is even
suggested that "each may testify in his or her own behalf, although the testimony may inure to the benefit of the other
spouse, or against his or her own interest, although the testimony may also militate against the other spouse." 11 Upon
the other hand, it is insisted that compelling Paquita Lezama to testify will transgress section 20(b) of Rule 130,
especially if her testimony will support the plaintiff's charge.
The complaint charges "fraudulent conspiracy" on the part of the spouses and one Marciano C. Roque to make it
appear that the La Paz Ice Plant & Cold Storage Co., Inc. was indebted to Roque. The wife, Paquita Lezama, is called
upon to testify as an adverse party witness on the basis of her following participation in the alleged fraudulent scheme:
"that it was Paquita Lezama who as Secretary of the company signed the minutes of the meeting during which Manuel
Lezama was allegedly authorized to negotiate the loan and that it was she who, likewise as Secretary, made the entry in
the books of the corporation."
Evidently, Paquita Lezama will be asked to testify on what actually transpired during the meeting and will be asked
questions on the matter of the veracity or falsity of the entry in the books of the corporation. Whether her testimony will
turn out to be adverse or beneficial to her own interest, the inevitable result would be to pit her against her husband.
The interests of husband and wife in this case are necessarily interrelated. Testimony adverse to the wife's own
interests would tend to show the existence of collusive fraud between the spouses and would then work havoc upon
their common defense that the loan was not fictitious. There is the possibility, too, that the wife, in order to soften her
own guilt, if guilty she is, may unwittingly testify in a manner entirely disparaging to the interests of the husband.
Because of the unexpensive wording of the rule which provides merely that the wife cannot be examined "for or against
her husband without his consent," it is further argued that "when husband and wife are parties to an action, there is no
reason why either may not be examined as a witness for or against himself or herself alone," and his or her testimony
could operate only against himself or herself.12
Even if such view were generally acceptable as an exception to the rule, or even as a separate doctrine, it would be
inapplicable in this case where the main charge is collusive fraud between the spouses and a third person, and the
evident purpose of examination of the wife is to prove that charge.
Indeed, in those jurisdictions which allow one spouse to be subjected to examination by the adverse party as a hostile
witness when both spouses are parties to the action, either the interests of the spouses are separate or separable, or
the spouse offered as a witness is merely a formal or nominal party.13
22 | P a g e

The final point urged upon us is that to prevent one spouse from testifying would encourage alliance of husband and
wife as an instrument of fraud; for then what better way would there be to prevent discovery than to make a coconspirator in fraud immune to the most convenient mode of discovery available to the opposite party? This argument
overlooks the fact that section 6 of Rule 132 is a mere concession, for the sake of discovery, from the rule which
precludes the husband or the wife from becoming the means of the other's condemnation. The said rule of discovery
should therefore not be expanded in meaning or scope as to allow examination of one's spouse in a situation where this
natural repugnance obtains.
It may not be amiss to state in passing that the respondent Dineros has not demonstrated that there is no evidence
available to him other than the Lezamas' testimony to prove the charge recited in the complaint.1wph1.t
ACCORDINGLY, the resolutions appealed from are versed, and this case is ordered remanded to the court of origin for
further proceedings in accordance with law. No costs.

COURT:
G.R. No. 143439 October 14, 2005
You may proceed.
MAXIMO ALVAREZ, Petitioner,
vs.
SUSAN RAMIREZ, Respondent.

xxx
DIRECT EXAMINATION
DECISION
ATTY. ALCANTARA:

SANDOVAL-GUTIERREZ, J.:
xxx
Before us is a petition for review on certiorari1 assailing the Decision2 of the Court of Appeals dated May 31, 2000 in CAG.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 arson 3 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.

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?

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.

A: He is my husband, sir, Maximo Alvarez.

Esperanza testified as follows:

Q: If that Maximo Alvarez you were able to see, can you identify him?

"ATTY. ALCANTARA:

A: Yes, sir.

We are calling Mrs. Esperanza Alvarez, the wife of the accused, Your Honor.

Q: If you can see him inside the Court room, can you please point him?

COURT:

A: Witness pointing to a person and when asked to stand and asked his name, he gave his name as Maximo Alvarez." 4

Swear in the witness.

In the course of Esperanzas direct testimony against petitioner, the latter showed "uncontrolled emotions," prompting
the trial judge to suspend the proceedings.

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.
23 | P a g e

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.

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.

Hence, this petition for review on certiorari.

As correctly observed by the Court of Appeals:
The issue for our resolution is whether Esperanza Alvarez can testify against her husband in Criminal Case No. 19933MN.
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 latters 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 Ordoo 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."

24 | P a g e

"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. Castaeda, 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.

[G.R. No. L-58164. September 2, 1983.]

JOSE GUERRERO, MARIA GUERRERO, MAGDALENA GUERRERO ESPIRITU, assisted by her husband
CANDIDO ESPIRITU, GREGORIO GUERRERO, CLARA GUERRERO, Et Al., Petitioner, v. ST. CLARES REALTY
CO., LTD., GUILLERMO T. GUERRERO, CECILIA GUERRERO, assisted by ANGELO CARDEO, PERLINDA
GUERRERO, etc., Et Al., Respondents.
Romeo J. Callejo, for Petitioners.
Poblador, Nazareno, Azada, Tomacruz & Paredez Law Offices for respondent United Housing Corp.
Neptali Gonzales & Associates for respondent Guerreros.
F.B. Santiago & Associates for respondent St. Clares Realty Co., Ltd.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; WITNESSES; INCOMPETENCY UNDER SEC. 20(a), RULE 130, RULES OF COURT,
CONSTRUED. The plain truth is that Laura Cervantes and Jose Cervantes are not parties in the present case, and
neither are they assignors of the parties nor "persons in whose behalf a case is prosecuted." They are mere witnesses
by whose testimonies the plaintiffs aimed to establish that it was not Cristina Guerrero, but Andres Guerrero, who owned
the disputed land at the time of its alleged sale to Manuel Guerrero; that Cristina Guerrero did not really sell but merely
mortgaged the property to Manuel Guerrero. It may be said that competency to testify established in Sec. 20(a), Rule
130, Rules of Court, affects only the persons therein mentioned, and no others, that is, only parties plaintiff or their
assignors, persons in whose behalf a case is prosecuted. Mere witnesses who are neither parties plaintiff, nor their
assignors, nor persons in whose behalf a case is prosecuted, are not included in the prohibition. (Moran, Comments on
the Rules of Court, 1970 ed., Vol. 5, p. 166) By excluding the testimonies of the two witnesses and by barring them from
further testifying, upon reasoning that unduly strained the meaning of the provisions of the Rules of Court relied upon,
the trial court deprived itself of the opportunity of knowing the truth in this case.
2. ID.; ID.; ID.; DEAD MANS RULE; INAPPLICABLE IN THE CASE AT BAR. The present case is not a claim or
demand against the estate of the deceased Manuel Guerrero. The defendants Guerreros are not the executors or
administrators or representatives of such deceased. They are being sued as claimants of ownership in their individual
capacities of the disputed lot. The lot is not a part of the estate of Manuel Guerrero. Hence, the inapplicability of dead
mans rule. "It has been held that statutes providing that a party in interest is incompetent to testify where the adverse
party is dead or insane, must be applied strictly in accordance with their express wording, irrespective of their spirit. The
law uses the word against an executor or administrator or other representative of a deceased person. It should be
noted that after the mention of an executor or administrator the words or other representative follows, which means that
the word representative includes only those who, like the executor or administrator, are sued in their representative, not
personal, capacity. And that is emphasized by the law by using the words against the estate of such deceased persons,
which convey the idea of an estate actually owned by the deceased at the time the case was brought and that,
therefore, it is only his rights that are to be asserted and defendant in the litigation by the person representing him, not
the personal rights of such representative." (Moran, ibid., pp. 169-171)
3. ID.; ID.; IMPROVIDENT EXCLUSION AND PRECLUSION FROM PRESENTING FURTHER PROOF; CASE AT BAR.
Prior to the issuance of the courts order of June 14, 1974, by which the plaintiffs were "deemed to have waived their
right to further present or formally offer their evidence," the following had testified as witnesses of the plaintiffs, namely:
Alfredo Zamora, Roman Mataverde, Moises Javillionar, Dominador Ramirez, Bonifacio Sumulong, Frisco Cervantes,
Laura Cervantes and Jose Cervantes. It was error to hold that the testimonial evidence should have been formally
25 | P a g e

offered, or that without such offer, such evidence was waived. The offer of testimonial evidence is effected by calling the
witness to the stand and letting him testify before the court upon appropriate questions. (Moran, Comments on the
Revised Rules of Court, Vol. 6, 1970 ed., p. 122)
4. ID.; JUDGMENT RENDERED SOLELY ON THE BASIS OF DEFENDANTS EVIDENCE DISREGARDING THAT OF
THE PLAINTIFFS; REMAND TO TRIAL COURT PROPER RECOURSE. The trial court rendered its decision solely
on the basis of the defendants evidence and without regard to the proofs that the plaintiffs had presented on July 17,
1974 before the Court of Appeals could finally resolve plaintiffs petition to disqualify the trial judge. As modified by the
Court of Appeals, the decision sentences the plaintiffs to pay damages and attorneys feet, apart from the costs of suit,
in the staggering amount of Two Million One Hundred Eighty Three Thousand and Five Hundred (P12,183,500.00)
Pesos, without plaintiffs having been gives, the chance to complete their evidence, to cross-examine the witnesses of
the defense, and to present rebuttal evidence. The way the trial court and the Court of Appeals proceeded in this case,
litigation became more a game of technicalities than a proceeding to search the truth and mete justice. No other fairer
course of action is demanded but for this Court to remand the case for further proceedings.
DECISION
In their petition for review by certiorari, petitioners are seeking a reversal of the decision of the former Court of Appeals
(now the Intermediate Appellate Court) dated April 30, 1981 in CA-G.R No. 57597-R, and its resolution dated
September 3, 1981 which denied the petitioners motion for reconsideration thereof. Our resolution of May 25, 1981
gave due course to the petition.
The action initiated by the petitioners in the Court of First Instance of Rizal prayed for a judgment:jgc:chanrobles.com.ph
"1. Declaring the in existence of the Deed of Sale of Lands, Annex A hereof, and Deeds of Absolute Sale, Annexes B
and C, as well as the Original Certificate of Title No. 4591 and Transfer Certificates of Title Nos. 339629 and 340842 of
the Registry of Deeds, null and void;
2. Declaring the plaintiffs (now petitioners) the owners in fee simple of the aforedescribed property, pro-indiviso;
3. Ordering the private defendants (now private respondents) to reconvey to the plaintiffs the aforedescribed lot;
4. Declaring the Joint Venture Agreement executed by the defendant partnership and the defendant corporation null
and void and ineffective insofar as the plaintiffs are concerned;
5. Ordering the defendant Register of Deeds of Rizal to issue a new transfer certificate of title in favor of the plaintiffs
over the said lot;
6. Condemning the defendants, except the defendant Register of Deeds, to pay the plaintiffs, actual and exemplary
damages, the amounts of which they will prove during the hearing of the instant case on the merit;
7. Condemning the defendants, except the defendant Register of Deeds, to pay to the plaintiffs attorneys fees in the
amount of P5,000.00; plus costs of suit." (Printed Record on Appeal, pp. 116-118.)
Petitioners original and amended complaints alleged that during their lifetime the spouses Isidoro Guerrero and Panay
Ramos were the absolute owners of the disputed property, which is a parcel of land located at San Dionisio, Paraaque,
Rizal, with an area of 42,299 square meters, more or less. The spouses had six children, named Andres, Juliana,
Aurelio, Leona, Jose and Cristina, and all surnamed Guerrero. Panay Ramos predeceased Isidoro Guerrero. Before his
demise, Isidoro Guerrero verbally willed and ordained that the questioned lot be assigned and adjudicated to Andres
Guerrero as his share in the inheritance, the other children having been assigned other lots. Accordingly, upon the death
of Isidoro Guerrero, Andres Guerrero physically possessed the lot and cultivated it through his tenant Dominador

Ramirez, who earned a 50% share in the net produce, the other 50% being retained by Andres Guerrero who defrayed
the cultivation expenses and real estate taxes on the property. Shortly after the beginning of the Japanese occupation,
Andres Guerrero entrusted the land to his sister, Cristina Guerrero, and allowed her to have the property cultivated and
to retain the owners share in the harvests. The arrangement between brother and sister was that Cristina Guerrero
could continue in the cultivation of the land and enjoyment of the owners share in the produce for as long as she
needed the property. Dominador Ramirez continued his tenancy until shortly before the death of Andres Guerrero.
Sometime in July 1943, Andres Guerrero died survived by his widow, Segunda Laquindanum, and their children, who
are the petitioners in this case. Cristina Guerrero continued as trustee of the deceased Andres Guerrero.chanrobles
virtual lawlibrary

information that the disputed lot was borrowed from Andres Guerrero and that Cristina Guerrero merely mortgaged it to
Manuel Guerrero, he went to the house of Manuel Guerrero in Barrio San Dionisio, Paraaque, Rizal, in 1968 at the
behest of the plaintiffs, to inquire about the mortgage; that in reply, Manuel Guerrero stated that the land had been sold
but it would be changed with another lot of the same area; that in 1970, Sotero Cervantes and Laura Cervantes,
children of Cristina Guerrero, and he went to see Manuel Guerrero at the Sta. Rita Church in Paraaque; that Sotero
and Laura asked if they could get the land back, that Manuel Guerrero answered that it were better to change the
disputed lot with another parcel of the same area and value; that as he was not satisfied with the answer, Frisco
Cervantes went to the Office of the Register of Deeds in Pasig, Rizal, where he obtained a copy of a Deed of Sale in
favor of Manuel Guerrero which he delivered to the children of Andres Guerrero.chanroblesvirtualawlibrary

The complaints further alleged that as early as December 10, 1957, the land was surveyed by the Bureau of Lands for
and in the name of Andres Guerrero as Lot No. 4752, Case No. 4, Cadastre No. 229 of the Paraaque Cadastre.
Sometime during the latter part of 1971 certain people who introduced themselves as agents or buyers of the land
approached some of the plaintiffs in order to secure their consent to the sale of the property. Said plaintiffs were
informed that the land was titled in the name of their cousin, Manuel Guerrero. Plaintiffs made inquiries and discovered
the following: that Manuel Guerrero was able to have the lot titled in his name on the basis of a Deed of Sale of Land
dated April 24, 1948 purportedly executed by Cristina Guerrero; that he caused the lot to be surveyed in his name as
Lot No. 4752 and he was issued advance Plan No. AP-10008 on February 28, 1962; that in the advance plan issued to
him, it was duly noted that Lot No. 4752 had been previously surveyed for Andres Guerrero; that in 1963, Manuel
Guerrero, assisted by Felicisimo Guerrero, father of the defendants Guerreros, filed an application for registration of
land with the Court of First Instance of Rizal; that notwithstanding the opposition of the heirs of Cristina Guerrero, the
court ruled that Manuel Guerrero owned the lot; that despite oppositors appeal to a higher court, the Register of Deeds
issued Original Certificate of Title No. 4591 to the applicant; that on September 14, 1971, there was filed with the
Register of Deeds of Rizal a "Deed of Absolute Sale" purportedly executed by Manuel Guerrero in favor of the
defendants Guerreros; that the Register of Deeds gave due course to the registration of that deed, cancelled OCT No.
4591 and was issued Transfer Certificate No. 339629 in its stead; that on the same day that the deed of sale was
registered, the defendants Guerreros caused to be notarized an "Articles of Partnership" of St. Clares Realty Company,
Ltd., constituting themselves as partners; that on September 28, 1971, the defendants Guerreros sold the disputed lot in
a "Deed of Absolute Sale" to the St. Clares Realty Company, Ltd.; that by virtue thereof, the Register of Deeds issued
TCT No. 340842 in the name of said realty company.

Roman Mataverde, Chief Geodetic Engineer of the Bureau of Lands designated as Officer-In-Charge of the Surveys
Division, testified for the plaintiffs that in the Bureaus Lot Data Computation Book showing the list of claimants for Lot
4752, Case 4, Cadastre 299, Paraaque, Rizal, (Exhibit A), which was surveyed on December 10, 1957, Andres
Guerrero is listed as claimant. The records of the Bureau of Lands from 1957 (when Lot 4752 was cadastrally surveyed
for Andres Guerrero) until 1962 show no claimant to the property except Andres Guerrero. In 1962, the Bureau of lands
received a letter with an affidavit attached to it from Manuel Guerrero requesting that an advance plan be made.
Advance Plan No. 10008 was made without Andres Guerrero being notified. But in the advance plan, the Bureau of
Lands listed Andres Guerrero as original claimant so that he would not be prejudiced when a case comes to trial.

According to the original and amended complaints, the Deed of Sale in favor of Manuel Guerrero was fraudulent,
simulated and falsified for the reason, among others, that Cristina Guerrero was not the owner of the land at the time
she purportedly sold it; that Manuel Guerrero obtained OCT No. 4591 in fraud of the plaintiffs; that the Deeds of Sale to
the defendants Guerreros and St. Clares Realty Company, Ltd. and the transfer certificates of title in their favor are
fraudulent and simulated, and ineffective against the plaintiffs for the reason, among others, that at the time of execution
of the Deeds of Sale, the defendants Guerreros knew that the property belonged to Andres Guerrero; that long after the
complaint in the present case has been filed, the plaintiffs came to know that the St. Clares Realty Company, Ltd.
executed a "Joint Venture Agreement" with the United Housing Corporation under which the latter bound itself to
develop the property into a residential subdivision; and that the said agreement was entered into in gross and evident
bad faith.

After Laura Cervantes had thus testified, counsel for the defendants Guerreros objected to the line of questioning on the
ground that the said witness was testifying "on matters which are prohibited under Sec. 20(a), Rule 130, of the Rules of
Court." The trial court having ruled that the witness "may answer", defendants counsel registered a continuing
objection. The court allowed the witness to continue her testimony subject to such objection. (TSN, pp. 9-20, October
19, 1973.)

Separate answers were filed by the defendants Guerreros, St. Clares Realty Company, Ltd. and United Housing
Corporation. The defendants Guerreros alleged that Cristina Guerrero was the absolute owner of the property; that the
action of the plaintiffs had prescribed and they are guilty of laches. St. Clare s Realty Company, Ltd. averred that its
contract with United Housing Corporation was made in good faith. United Housing Corporation averred that there is no
privity of interest between plaintiffs and this defendant considering that the plaintiffs are not parties to the Joint Venture
Agreement.
Issues having been joined, the case proceeded to trial.
Frisco
grandson of Cristina Guerrero, testified as a witness of the plaintiffs that having had previous
26
| P aCervantes,
ge

Dominador Ramirez testified that during the rainy season of 1936, Andres Guerrero asked him to work on his land
located at Barrio San Dionisio, Paraaque, Rizal, with an area of four (4) hectares, more or less. As tenant, his
agreement with Andres Guerrero was that he would till the land in consideration of 50% of the harvests with Andres
Guerrero shouldering the cultivation expenses. From 1936 to about 1941 or 1942, he worked on the land and gave 50%
of the produce to Andres Guerrero who went personally to the field to get the same. In 1941 or 1942, he stopped
working on the land because war had broken out.
On October 19, 1973, Laura Cervantes testified that her mother, Cristina Guerrero, had been sick for a long time before
she died at the age of 80 years in 1948; and that her mother could walk only inside their house in Paraaque; that the
money spent for the illness of her mother came from Manuel Guerrero; and that, through her children, Cristina Guerrero
could ask money from Manuel Guerrero because of the land that Andres Guerrero had lent to her.

Resuming her testimony, Laura Cervantes stated that the land was lent by Andres Guerrero to Cristina Guerrero; that
Manuel Guerrero loaned money to Cristina Guerrero for quite some time; that shortly after the death of Cristina
Guerrero, Manuel Guerrero went to their house, accompanied by Felicisimo Guerrero, and summed up the loans he had
extended to Cristina Guerrero in the total amount of P1,900.00; and that Felicisimo Guerrero asked Laura Cervantes to
sign a piece of paper to attest to the fact that a certain amount of money had been borrowed from Manuel
Guerrero.cralawnad
On October 24, 1973, the defendants Guerreros filed a written motion to disqualify Laura Cervantes as a witness on the
basis of Section 20(a), Rule 130, of the New Rules of Court. The motion was opposed by the plaintiffs. On November
16, 1973, the trial court granted the motion and declared that Laura Cervantes, Jose Cervantes as well as other
witnesses similarly situated, are disqualified to testify in the case.
On February 12, 1974, plaintiffs filed a "Motion For The Honorable Presiding Judge Of This Honorable Court To Inhibit
Himself And/Or To Transfer Case To Another Branch." Oppositions to the said motion were filed. On April 26, 1974, the

trial court denied the motion.

witnesses of the defendants, and present rebuttal evidence.

At the continuation of the trial on June 14, 1974, plaintiffs and their counsel failed to appear despite due notice and
repeated previous warnings to their lawyer. Instead of appearing in court, plaintiffs, thru counsel, filed an urgent motion
to reset the hearing, which was opposed by the defendants. On even date, the court issued an order as
follows:jgc:chanrobles.com.ph

On August 21, 1974, plaintiffs filed a motion for reconsideration of the decision which they received on July 23, 1974.

"In view of the non-appearance of the plaintiffs as well as their counsel for todays hearing, they are deemed to have
waived their right to further present or formally offer their evidence in court, and on motion of defendants counsels, the
Clerk of Court, Atty. Juan A. Carambas, is hereby authorized and commissioned to receive the evidence for the
defendants. After the defendants have closed their case, they are given 10 days within which to file their respective
memoranda and the case is deemed submitted for decision after receipt of the complete transcript of stenographic
notes." (Record on Appeal, p. 212.)

"1) The plaintiffs Motion Ex-Abundantia Cautela dated July 18, 1974, having been passed upon by Judge Arsenio B.
Alcantara by the rendition of the Decision dated July 17, 1974, is deemed to have been clearly denied by the Honorable
Judge who penned the said decision;

On June 22, 1974, plaintiffs filed a "Manifestation" to the effect that they did not waive their rights to present further
evidence, to cross-examine defendants witnesses, and to present rebuttal evidence; and that they were reserving the
exercise of those rights upon the finality of the decision of the Court of Appeals in a petition for certiorari, prohibition and
mandamus against the Presiding Judge of the trial court, which they were then preparing to file.
Indeed, on June 25, 1974, plaintiffs instituted the said special civil action, which was docketed in the Court of Appeals
as its CA-G.R. No. SF-03120. The action sought the disqualification of the trial judge from continuing with the hearing of
the case. On June 27, 1974, the Court of Appeals denied the petition outright. Copy of the resolution was received by
the plaintiffs on July 2, 1974. They filed a motion for reconsideration on July 17, 1974.
On the same date, July 17, 1974, the trial court rendered its decision with the following dispositive
part:jgc:chanrobles.com.ph
"WHEREFORE, judgment is hereby rendered in favor of the defendants (and) against the plaintiffs:chanrob1es virtual
1aw library
1. Dismissing the complaint and Amended Complaint;
2. Ordering the plaintiffs to pay the private defendant Guerreros the amount of P20,000.00 for actual damages,
P500,000.00 for moral damages and P10,000.00 as attorneys fees;
3. Ordering the plaintiffs to pay the defendant St. Clares Realty Co. Ltd., the amount of P1,923,000.00 as actual
damages, P50,000.00 as exemplary damages and P5,000.00 as attorneys fees;
4. Ordering the plaintiffs to pay the defendant United Housing Corporation the amount of P90,500.00 as actual
damages; P100,000.00 for loss of goodwill and business reputation, P80,000.00 as exemplary damages, P15,000.00 as
lawyers fees; and
5. To pay the cost of suit.
The Register of Deeds of Rizal is hereby directed to cancel the Lis Pendens in Transfer Certificate of Title No. 340842 in
the name of the St. Clares Realty Co., Ltd., Book T-1971. Meanwhile, the defendant United Housing Corporation is
ordered to proceed and continue with its commitments under the Memorandum Agreement dated October 12, 1971."
(Record on Appeal, pp. 259-261.)cralawnad
On July 20, 1974, or three (3) days before plaintiffs received the decision, they filed with the trial court a "Motion ExAbundantia Cautela" praying that should the Court of Appeals render an adverse resolution in CA-G.R. No. SF-03120,
the| lower
27
P a g court
e should set aside its order of June 14, 1974 and allow plaintiffs to present other evidence, cross-examine

Early in 1975, Judge Arsenio Alcantara who rendered the decision was replaced by Judge Floreliana Castro-Bartolome.
In her order of February 13, 1975, Judge Castro-Bartolome resolved that:jgc:chanrobles.com.ph

2) The plaintiffs Motion for Reconsideration dated August 21, 1974 and Supplemental Motion for Reconsideration
dated August 22, 1974, have to be as they are hereby, denied;
x

5) The plaintiffs Motion for Reconsideration and Supplemental Motion for Reconsideration are not pro-forma and have
suspended the running of the period of appeal."cralaw virtua1aw library
On February 21, 1975, plaintiffs perfected their appeal to the Court of Appeals where the case was docketed as CAG.R. No. 57597-R. On April 20, 1981, the Court of Appeals rendered its decision as follows:jgc:chanrobles.com.ph
"WHEREFORE, all the foregoing considered, the decision appealed from is hereby affirmed, with modification in regard
to damages as follows: (a) for the defendants Guerreros, P50,000.00 moral damages, and P10,000.00 exemplary
damages; (b) for the defendant St. Clares Realty Co., Ltd., P10,000.00 exemplary damages; (c) for the defendant
United Housing Corporation, P40,000.00 for loss of goodwill and business reputation and P10,000.00 exemplary
damages. The actual damages and attorneys fees are hereby maintained."cralaw virtua1aw library
On May 27, 1981, the Court of Appeals denied plaintiffs motion for reconsideration.
Hence, the present petition for review by certiorari.
In their instant petition for review, petitioners have raised substantive and procedural points on which the lower tribunals
have allegedly erred. The substantive issues refer to the lack of basis for the grant of actual, moral and exemplary
damages in the huge amount of over two million pesos; and the error of ruling that the action was barred by prescription
and laches. Petitioners underscore the procedural errors they attribute to the lower courts which resulted in the
deprivation of their full opportunity to ventilate their case and prove the validity of their claim. They assail the ruling that
their witnesses Laura Cervantes, Jose Cervantes "and others similarly situated" are disqualified to testify; and that they
waived the right to present their evidence when they failed to appear at a hearing set by the trial judge during the
pendency of proceedings taken by the petitioners to disqualify him due to alleged hostility manifested by the latter
towards the petitioners.chanroblesvirtualawlibrary
At this instance, We consider it unnecessary to discuss the substantive merits of the petitioners cause of action. The
record reveals that they have not yet completed the presentation of their evidence. Whatever evidence they had
previously presented were apparently not considered in the rendition of the questioned decisions for not having been
"formally offered." It does not strike Us as fair and just that the petitioners would be made answerable for damages in
such a huge amount for having filed an allegedly baseless and unfounded action without affording them the full
opportunity of establishing the merit of their claim. On the face of the record, We are convinced that they had been
denied that chance due to some mistaken and capricious application of pertinent procedural rules.

The first question of importance that engages the attention of this Court is whether or not the witnesses Laura
Cervantes and Jose Cervantes were correctly disqualified from testifying in the case and their testimonies excluded on
the basis of Section 20(a), Rule 130, of the Rules of Court, which provides as follows:jgc:chanrobles.com.ph
"Section 20. Disqualification by reason of interest or relationship. The following persons cannot testify as to matters in
which they are interested, directly or indirectly as herein enumerated:chanrob1es virtual 1aw library
(a) 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 became of unsound mind."cralaw
virtua1aw library
Upon the facts and under the law, this Court is fully persuaded that the affirmative rulings of both the trial court and the
Court of Appeals were made in error. The plain truth is that Laura Cervantes and Jose Cervantes are not parties in the
present case, and neither are they assignors of the parties nor "persons in whose behalf a case is prosecuted." They
are mere witnesses by whose testimonies the plaintiffs aimed to establish that it was not Cristina Guerrero, but Andres
Guerrero, who owned the disputed land at the time of its alleged sale to Manuel Guerrero; that Cristina Guerrero did not
really sell but merely mortgaged the property to Manuel Guerrero.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
"Following this rule of construction, it may be said that incompetency to testify established in the provision above
quoted, affects only the persons therein mentioned, and no others, that is, only parties plaintiff or their assignors,
persons in whose behalf a case is prosecuted. Mere witnesses who are neither parties plaintiff, nor their assignors, nor
persons in whose behalf a case is prosecuted, are not included in the prohibition." (Moran, Comments on the Rules of
Court, 1970 ed., Vol. 5, p. 166.)
By excluding the testimonies of the two witnesses and by barring them from further testifying, upon reasoning that
unduly strained the meaning of the provisions of the Rules of Court relied upon, the trial court deprived itself of the
opportunity of knowing the truth in this case.
Moreover, the present case is not a claim or demand against the estate of the deceased Manuel Guerrero. The
defendants Guerreros are not the executors or administrators or representatives of such deceased. They are being
sued as claimants of ownership in their individual capacities of the disputed lot. The lot is not a part of the estate of
Manuel Guerrero. Hence, the inapplicability of the dead mans rule.
"It has been held that statutes providing that a party in interest is incompetent to testify where the adverse party is dead
or insane, must be applied strictly in accordance with their express wording, irrespective of their spirit. The law uses the
word against an executor or administrator or other representative of a deceased person. It should be noted that after
the mention of an executor or administrator the words or other representative follows, which means that the word
representative includes only those who, like the executor or administrator, are sued in their representative, not
personal, capacity. And that is emphasized by the law by using the words against the estate of such deceased
persons, which convey the idea of an estate actually owned by the deceased at the time the case was brought and that,
therefore, it is only his rights that are to be asserted and defendant in the litigation by the person representing him, not
the personal rights of such representative." (Moran, ibid, pp. 169-171.)
The next question that requires attention is whether or not the exclusion of plaintiffs evidence and their preclusion from
presenting further proof was correctly sustained by the respondent Court of appeals. Prior to the issuance of the courts
order of June 14, 1974, by which the plaintiffs were "deemed to have waived their right to further present or formally
offer their evidence", the following had testified as witnesses of the plaintiffs, namely: Alfredo Zamora, Roman
Mataverde,
28
| P a g e Moises Javillonar, Dominador Ramirez, Bonifacio Sumulong, Frisco Cervantes, Laura Cervantes and Jose

Cervantes. It was error to hold that the testimonial evidence should have been formally offered, or that without such
offer, such evidence was waived. The offer of testimonial evidence is effected by calling the witness to the stand and
letting him testify before the court upon appropriate questions. (Moran, Comments on the Revised Rules of Court, Vol.
6, 1970 ed., p. 122.)chanrobles virtual lawlibrary
Notwithstanding rigid cross-examination conducted by the lawyers of the defendants, the witnesses discovered the
following facts: In the 1930s Andres Guerrero physically possessed the disputed lot, paid the real estate taxes for it,
had the same cultivated through a tenant, defrayed the cultivation expenses, and exclusively enjoyed the owners share
in the harvests. Andres Guerrero loaned the lot to his sister, Cristina Guerrero, before he died. Cristina Guerrero
became ill prior to the year 1948. She could walk only inside her house in Paraaque, Rizal. The money spent for her
illness was borrowed from Manuel Guerrero. After the death of Cristina Guerrero, Manuel Guerrero and Felicisimo
Guerrero came to her house and the money loaned to her was totalled in the amount of P1,900.00. On December 10,
1957, the questioned lot was cadastrally surveyed and denominated as Lot 4752 of the Paraaque Cadastre. Andres
Guerrero was the lone claimant. Until 1962, no other person claimed the lot.
The foregoing proofs bear materially on the questions raised by the plaintiffs as to whether or not: (1) Cristina Guerrero
or Andres Guerrero owned the lot when the former purportedly sold it to Manuel Guerrero in 1948; (2) Cristina Guerrero
really sold or merely mortgaged the land to Manuel Guerrero; (3) Manuel Guerrero and, after him, the defendants
Guerreros were buyers in good faith. Instead of insulating itself from evidence that could lead it to the truth, the trial
court should have addressed itself to the questions why: (1) if it is true that Cristina Guerrero was the owner of the
disputed lot in 1948, the cadastral surveyors who actually repaired to the field listed Andres Guerrero as the sole
claimant of the property, (2) until 1962, no other person except Andres Guerrero claimed the lot as his own; (3)
notwithstanding the purported deed of sale by Cristina Guerrero to Manuel Guerrero was executed on April 24, 1948, it
was presented for registration with the Register of Deeds almost ten (10) years later only on February 27, 1958 (TSN, p.
15, January 9, 1974); (4) in the deed of sale to Manuel Guerrero, it is stated that he appeared in Paraaque, Rizal,
before Atty. Jose D. Villena who was a notary public in Makati, Rizal; (5) the area of the land bought by Manuel Guerrero
was 33,090 square meters whereas the area of the land sold by him to the defendants Guerreros was 42,299 square
meters. The court also ought rather to have noticed the fact that in the deed of sale in favor of Manuel Guerrero, it is
stated that the subject parcel of land "is surrounded by muddikes besides the stone monuments that visibly marked all
its "boundaries", which clearly indicate a previous survey and which may in turn lead to the question if the deed of sale
to Manuel Guerrero might have been made after the cadastral survey in 1957 and not in 1948.
The trial court rendered its decision solely on the basis of the defendants evidence and without regard to the proofs that
the plaintiffs had presented on July 17, 1974 before the Court of Appeals could finally resolve plaintiffs petition to
disqualify the trial judge. As modified by the Court of Appeals, the decision sentences the plaintiffs to pay damages and
attorneys fees, apart from the costs of suit, in the staggering amount of Two Million One Hundred Eighty Three
Thousand and Five Hundred (P2,183,500.00) Pesos, without plaintiffs having been given the chance to complete their
evidence, to cross-examine the witnesses of the defense, and to present rebuttal evidence. The way the trial court and
the Court of Appeals proceeded in this case, litigation became more a game of technicalities than a proceeding to
search the truth and mete justice. No other fairer course of action is demanded but for this Court to remand the case for
further proceedings.chanrobles.com.ph : virtual law library
WHEREFORE, the decision of the respondent Court of Appeals is hereby set aside. Let the records of the case be
remanded to the court of origin with instruction to the trial court to allow the plaintiffs to complete their evidence, to
cross-examine the defendants witnesses, and to present rebuttal evidence if they so desire, and thereafter to decide
the case anew.
SO ORDERED.

G.R. No. L-16741

January 31, 1962

FLORENCIA Q. DE ABRAHAM, ALFONSO ABRAHAM, and JESUS ABRAHAM, petitioners,

vs.
INTESTATE ESTATE OF JUAN C. YSMAEL, PRISCILLA RECTO-KASTEN, respondent.
Menandro Quiogue for petitioners.
Jose Ma. Recto and Paterno R. Canlas for respondent.
DE LEON, J.:
This is a petition to review on certiorari the decision of the Court of Appeals in CA-G.R. No. 21222-R.
The facts as shown by the record are as follows: On September 3, 1943, Juan C. Ysmael, obtained a loan from Alfonso
Abraham, Sr. in the amount of P12,500.00 in Japanese currency notes, and executed a promissory note in favor of the
latter promising to pay the loan within 90 days with interest at the rate of 10% per annum. The note was executed in the
presence of Florencia Q. Abraham, the creditor's wife, who affixed her signature at the bottom thereof as a witness
thereto. Upon the maturity of the note, a demand was made for its payment, but the debtor failed to pay.
On February 9, 1945, Alfonso Abraham, Sr. died. On the other hand, Juan C. Ysmael died intestate on April 23, 1952
leaving the note still unpaid.
On November 13, 1954, in Special Proceedings No. Q-285 for the settlement of the intestate estate of Juan Ysmael,
pending before the Court of First Instance of Quezon City, Florencia Q. Vda. de Abraham, together with her sons,
Alfonso and Jesus, all surnamed Abraham, filed a pleading entitled "Reclamation" demanding payment of the amount
represented by the note. Because no regular administrator of the estate had yet been appointed by the court, the
"Reclamation" was not acted upon. However, as soon as Priscilla Recto-Kasten was appointed administratrix, the
claimants reproduced their "Reclamation" before the lower court and the same was finally set for hearing. As agreed
upon by the parties, the reception of evidence was delegated to a commissioner. During the hearing before the
commissioner, the counsel for the administratrix interposed a general and continuing objection to the testimony of
Florencia Vda. de Abraham invoking the provisions of Section 26(c), Rule 123 of the Rules of Court. However, after the
claimant had testified, he lengthily cross-examined her on the very matters against which he interposed a general
objection.1wph1.t
On October 4, 1956, the lower court issued in Order-Decree allowing the claim against the intestate estate of Juan C.
Ysmael, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court rules that the claimants established a just
and valid claim against the estate of Juan C. Ysmael, and therefore the "reclamation" under consideration is
hereby APPROVED.
The administratrix is hereby ordered to pay the claimants herein the amount of P5,000.00 with interest
thereon at 10% per annum, in accordance with the Ballantyne Scale of Value for the year December, 1943,
out of the funds of the estate in the course of her administration.
SO ORDERED.
29 | P a g e

From the above Order-Decree, Priscilla Recto-Kasten, the administratrix, appealed to the Court of Appeals. The
appellate court concluding that "the lower court erred in finding that the claimants have established a just and valid
claim, and in allowing the claim supposing it was a claim with consideration when the same had been barred by
prescription, estoppel and laches," reversed the Order-Decree appealed from. Hence, this petition for review brought by
the claimants.
The main issue in this petition is whether or not petitioners have established a just and valid claim. And if the answer is
in the affirmative, whether the same is already barred by prescription and laches.
The record shows that petitioners have established the due execution and genuineness of the promissory note and that
respondents failed to present any evidence to destroy the same. Thus in the Order-Decree appealed from, the lower
court observed:.
It is interesting to note that the promissory note executed by the deceased was produced before the Court
and marked as Exhibit B-1, and the circumstances under which the same was executed was extensively
described by Florencia Q. de Abraham during the hearing, who, strikingly is one of the witnesses to the said
instrument. Much to the surprise of the Court this description was more vividly given by the said witness not in
answer to the questions propounded by her lawyer but on cross-examination of counsel for the administratrix,
who feebly attempted to destroy the due execution and genuineness of the said document. It is indeed
unfortunate that counsel for the administratrix did not choose to present evidence to destroy the alleged
genuineness of the promissory note (Exhibit B-1) in support of his theory, despite his insinuation during the
course of the trial that he might try to secure the services of an expert to determine the genuineness of the
signature of the late Juan C. Ysmael mentioned therein. (t.s.n., p. 83), Again counsel manifested that if
Exhibit B-1 is a genuine document the same has been fully paid already, (t.s.n., p. 83), however, counsel did
not present any proof to support this contention.
It is true that Section 26(c), Rule 123 of the Rules of Court provides:.
(c) Parties or assignors of parties to a case, or persons in whose behalf a case is prosecuted, against an
executor administrator or other representative of a 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;
However, there was a waiver of the prohibition when the counsel for the administratrix extensively cross-examined the
witness on the very matters subject of the prohibition. (Wright v. Tinio, G.R. No. L-4004, May 29, 1952; see also Tongco
v. Vianzon, 50 Phil. 698; Macfarlane v. Green, 54 Phil. 551) It was for this reason that the trial judge eventually overruled
the counsel's previous general and continuing objection and admitted the testimony of the witness. Furthermore, it is
difficult to believe that the counsel's lengthy cross-examination on the prohibited matter was merely for the purpose of
establishing the "motive, prejudices and predilection" of the witness. In this connection, it has been said: .
... . The reason for the rule apparently is that a litigant cannot be permitted to speculate as to what his
examination of a witness may bring forth. Having made his selection of one of two courses which he may
pursue, he has no right, after he discovers that the course selected is not to his advantage, and after he has
put the opposite party to the expense, and has consumed the time of the courts in a trial of the case in
accordance with the course selected, to change his position and make another and different selection. Such
course would be unfair both to the opposite party and to the court and should not be countenanced in any
court of justice. (IV Francisco, RULES OF COURT, 876, 877, citing the case of Comstock's Adm'r vs. Jacob,
89 VT. 133, 94 A. 497, Ann. Cas. 1918A, 465)

The next issue is whether or not the claim is already barred by prescription and laches. Under the New Civil Code, an
action upon a written contract must be brought within 10 years from the time the right of action accrues. (Art. 1144, par.
1). In the case at bar, the cause of action accrued on December 3, 1943 (the date when the note became due and
demandable) and petitioners filed their "reclamation" only on November 13, 1954. Apparently, the action has already
prescribed, because more than ten years had elapsed before any suit was filed. However, it must be remembered that
the provisions on moratorium had the effect of suspending the statute of limitations from November 18, 1944 when
Executive Order No. 25 was issued, to May 18, 1953, the date of promulgation of the decision in the case of Rutter v.
Esteban (G.R. No. L-3708) holding such provisions no longer applicable (Rio y Compania v. Sandoval, G. R. No. L9391, November 28, 1956; Compania Maritima vs. Court of Appeals, G.R. No. L-14949, May 30, 1960). Thus, from
December 3, 1943 to November 13, 1954, eleven years, eleven months and ten days have elapsed. Deducting from this
period eight years and six months, the time during which the statute of limitations was suspended, it is clear that
petitioners' claim has not yet prescribed when it was filed on November 13, 1954.
Respondents, however, contend that Republic Act No. 342, which took effect on July 26, 1948, lifted the moratorium on
debts contracted during the Japanese occupation. The contention is untenable. This court has already held that
Republic Act No. 342 did not lift the moratorium on debts contracted during the war (Uy v. Kalaw Katigbak. G.R. No. L1830, Dec. 31, 1949) but modified Executive Order No. 32 is to pre-war debts, making the protection available only to
debtors who had war damage claims (Sison v. Mirason, G.R. No. L-4711, Oct. 31, 1952).
In order that the defense of laches may prosper, the following elements must be present: (1) conduct on the part of
defendant, or one under whom he claims, giving rise to the situation complained of, (2) delay in asserting complainant's
right after knowledge or notice of defendant's conduct and an opportunity to sue, (3) lack of knowledge or notice on the
part of the defendant that complainant would assert the right on which he bases suit, and (4) injury or prejudice to
defendant in the event relief is accorded. (Villoria v. Secretary of Agriculture and Natural Resources, G.R. No. L-11754,
April 29, 1960) Assuming that the first three elements are present, we do not see how the last element may exist, for
neither injury or prejudice to respondent may occur by the allowance of the claim. It should be emphasized here that
mere lapse of time during which there was neglect to enforce the right is not the sole basis of the rule on laches, but
also the changes of conditions which arise during the period there has been neglect. When there are no changes of
conditions detrimental to the defendant, the defense of laches may not prosper.
IN VIEW OF THE FOREGOING, the decision of the Court of Appeals in CA-G.R. No. 21222-R is hereby reversed and
the Order-Decree dated October 4, 1956 of the Court of First Instance of Quezon City in Special Proceedings No. Q285 is hereby affirmed in all respects. Without cost.

30 | P a g e

Fdo. Praxedes T. Villanueva

G.R. No. L-27434 September 23, 1986
Por: Fdo Genaro Goi Apoderado 2
GENARO GOI, RUFINA P. vda. DE VILLANUEVA, VIOLA P. VILLANUEVA, OSCAR P. VILLANUEVA, MARINA P.
VILLANUEVA, VERNA P. VILLANUEVA, PRAXEDES P. VILLANUEVA, JR., JOSE P. VILLANUEVA, SAMUEL P.
VILLANUEVA, LOURDES P. VILLANUEVA, MILAGROS P. VILLANUEVA DE ARRIETA, petitioners-appellants,
vs.
THE COURT OF APPEALS and GASPAR VICENTE, respondents-appellees.

Private respondent Vicente thereafter advised TABACALERA to debit from his account the amount of P13,807.00 as
payment for the balance of the purchase price. However, as only the amount of P12,460.24 was actually needed to
complete the purchase price, only the latter amount was debited from private respondent's account. The difference was
supposedly paid by private respondent to Villanueva, but as no receipt evidencing such payment was presented in
court, this fact was disputed by petitioners.

Ambrosio Padilla Law Office for petitioners-appellants.

San Juan, Africa, Gonzales & San Agustin Law Office for respondents-appellees.

FERNAN, J.:
This is an appeal by certiorari from the decision of the then Court of Appeals in CA-G.R. No. 27800-R entitled,"Gaspar
Vicente, Plaintiff-Appellant, vs. Genaro Goni, et. al., Defendants-Appellants" as well as from the resolution denying
petitioners' motion for reconsideration.
The factual backdrop is as follows:
The three (3) haciendas known as San Sebastian, Sarria and Dulce Nombre de Maria situated in the Municipality of
Bais, Negros Oriental, were originally owned by the Compania General de Tabacos de Filipinas [TABACALERA].
Sometime in 1949, the late Praxedes T. Villanueva, predecessor-in-interest of petitioners, negotiated with TABACALERA
for the purchase of said haciendas. However, as he did not have sufficient funds to pay the price, Villanueva with the
consent of TABACALERA, offered to sell Hacienda Sarria to one Santiago Villegas, who was later substituted by
Joaquin Villegas. Allegedly because TABACALERA did not agree to the transaction between Villanueva and Villegas,
without a guaranty private respondent Gaspar Vicente stood as guarantor, for Villegas in favor of TABACALERA. The
guarantee was embodied in a document denominated as "Escritura de Traspaso de Cuenta." 1
Either because the amount realized from the transaction between Villanueva and Villegas still fell short of the purchase
price of the three haciendas, or in consideration of the guaranty undertaken by private respondent Vicente, Villanueva
contracted or promised to sell to the latter fields nos. 3, 4 and 13 of Hacienda Dulce Nombre de Maria for the sum of
P13,807.00. This agreement was reduced to writing and signed by petitioner Genaro Goni as attorney-in-fact of
Villanueva, thus:
En consideracion a la garantia que Don Gaspar Vicente assume con la Cia. Gral. de Tabacos de
Filipinas por el saldo de Don Santiago Villegas de P43,539.75 asumido por Don Joaquin Villegas el
que Subscribe Praxedes T. Villanueva se compromete ceder es venta a Don Gaspar Vicente los
campos nos. 3, 4 y 13 del plano de porcelario de la Hacienda Dulce Nombre de Maria, en compra
projectada de la Cia. Gral. de Tabacos de Filipinas. Estas campos representan 6-90-35 hectares
por valor de P13,807.00 que Don Gasper Vicente pagara directamente a Praxedes T. Villanueva
Bais Central, Octubre 24, 1949.
31 | P a g e

It is alleged by petitioners that subsequent to the execution of the contract/promise to sell, Villanueva was able to raise
funds by selling a property in Ayungon, Negros Oriental. He thus went to private respondent Vicente for the purpose of
rescinding the contract/promise to sell However, as the amount of P12,460.24 had already been debited from private
respondent's account, it was agreed that lots 4 and 13 of the Hacienda Dulce Nombre de Maria would merely be leased
to private respondent Vicente for a period of five (5) years starting with crop-year 1950-51 at an annual rental of 15% of
the gross income, said rent to be deducted from the money advanced by private respondent and any balance owing to
Villanueva would be delivered by Vicente together with the lots at the end of the stipulated period of lease.
On December 10, 1949, TABACALERA executed a formal deed of sale covering the three haciendas in favor of
Villanueva. Fields Nos. 3, 4 and 13 of the Hacienda Dulce Nombre de Maria were thereafter registered in the name of
Villanueva under TCT No. T-4780 of the Register of Deeds of Negros Oriental. The fields were likewise mortgaged by
Villanueva to the Rehabilitation Finance Corporation (RFC), later transferred to the Philippine National Bank on
December 16, 1955, for a total indebtedness of
P334,400.00. 3
Meanwhile, Fields nos. 4 and 13 were delivered to private respondent Vicente after the 1949-1950 milling season in
January and February, 1950.
On June 17, 1950, Villanueva executed a "Documento de la Venta Definitive" in favor of Joaquin Villegas, covering Lot
No. 314 of the Cadastral Survey of Bais with an area of 468,627 square meters, more or less. (Hacienda Sarria). A
supplemental instrument was later executed by Villanueva in favor of Villegas to include in the sale of June 17, 1950 the
sugar quota of the land.
On November 12, 1951, Villanueva died. Intestate proceedings were instituted on November 24, 1951 before the then
Court of First Instance of Negros Oriental, docketed as Special Case No. 777. Among the properties included in the
inventory submitted to the court were fields nos. 3, 4 and 13 of Hacienda Dulce Nombre de Maria. Field no. 13 with an
area of 1 hectare, 44 ares and 95 centares was listed as Lot no. 723 of the inventory while fields nos. 3 and 4, with
areas of 3 hectares, 75 ares and 60 centares, and 1 hectare, 69 ares and 80 centares, respectively, were included in
Lot no. 257 of the inventory.
On October 7, 1954, the day before the intestate proceedings were ordered closed and the estate of the late Praxedes
Villanueva delivered to his heirs, private respondent Vicente instituted an action for recovery of property and damages
before the then Court of First Instance of Negros Oriental against petitioner Goi in his capacity as administrator of the
intestate estate of Praxedes Villanueva. In his complaint docketed as Civil Case No. 2990, private respondent Vicente
sought to recover field no. 3 of the Hacienda Dulce Nombre de Maria, basing his entitlement thereto on the
contract/promise to sell executed by the late Praxedes Villanueva in his favor on October 24, 1949. He likewise prayed
by way of attorney's fees and other costs the sum of P2,000.00 and for such other further relief which the court may
deem just and equitable in the premises. 4

On October 25, 1954, petitioner Goni as defendant in Civil Case No. 2990, filed an answer with counterclaim for
accounting of the produce of fields nos. 4 and 13, as well as the surrerder thereof on June 20, 1955, the end of the fifth
crop-year, plus moral damages in the sum of P30,000.00 and P3,000.00 as attorney's fees. After an answer to the
counter-claim had been filed, private respondent Vicente amended his complaint on September 1, 1955, to include a
prayer for damages representing the produce of field no. 3 from 1949-50 until delivery thereof to him. An answer with
counterclaim to the amended complaint was duly filed, and on April 25, 1956, private respondent Vicente amended his
complaint anew to include as parties-defendants the heirs of the late Praxedes Villanueva.
On July 13, 1957, the parties entered into a stipulation of facts, agreeing, among others, on the costs of production and
produce of the three fields in question. The case thereafter proceeded to trial. Plaintiff presented two (2) witnesses: then
party-plaintiff Gaspar Vicente, himself, who over the objection of therein defendants testified on facts occurring before
the death of Praxedes Villanueva, and Epifanio Equio a clerk of TABACALERA Agency in the Bais Sugar Central.
Defendants presented Genaro Goni, who testified on the alleged verbal lease agreement.
On December 18, 1959, the trial court rendered a decision ordering therein defendants-heirs to deliver to Gaspar
Vicente field no 3, to execute a formal deed of sale covering fields nos. 3, 4 and 13 in favor of Vicente, to pay the latter
actual or compensatory damages in the amount of P 81,204.48, representing 15% of the total gross income of field no.
3 for crop-years 1950-51 to 1958-59, and such other amounts as may be due from said field for the crop years
subsequent to crop-year 1958-59, until the field is delivered to Vicente, and to pay the sum of P2,000.00 as attorney's
fees plus costs. Therein defendant Goi was relieved of any civil liability for damages, either personally or as
administrator of the estate. 5
Both parties appealed the decision to the then Court of Appeals; the plaintiff from the portion awarding damages on a
claim that he was entitled to more, and defendants, from the entire decision.
On December 15, 1966, the Court of Appeals promulgated its decision, affirming that of the lower court, with the
modification that the amount of damages to be paid by defendant-heirs to the plaintiff should be the total net income
from field no. 3 from the crop year 1950-51 until said field is finally delivered to the plaintiff plus interest thereon at the
legal rate per annum. 6
Petitioners filed a motion for reconsideration, but were denied the relief sought in a resolution dated February 9, 1967.
Hence, the present appeal by certiorari whereby petitioners raise the following questions of law:
MAY RESPONDENT GASPAR VICENTE TESTIFY ON MATTERS OF FACT OCCURRING
BEFORE THE DEATH OF PRAXEDES T. VILLANUEVA, WHICH CONSTITUTES A CLAIM OR
DEMAND UPON HIS ESTATE. IN VIOLATION OF RULE 123, SEC, 26, PAR. (C), NOW RULE
130, SEC. 20 PAR. (A)?
MAY NOT A WRITTEN PROMISE TO SELL DATED OCTOBER 24,1949 BE NOVATED INTO A
VERBAL AGREEMENT OF LEASE DURING THE LIFETIME OF THE PROMISSOR, WHOSE
DEATH OCCURRED ON NOVEMBER 12, 1951, BY FACTS AND CIRCUMSTANCES
SUBSTANTIATED BY COMPETENT ORAL EVIDENCE IN THIS CASE?
SHOULD THE PROMISEE IN A PROMISE TO SELL, WHO PAID P12,460.24 WHICH WAS TO BE
ACCOUNTED AND TO BE CREDITED AS RENTALS AFTER FIVE (5) YEARS OF LEASE, WHO
IN HIS ORIGINAL COMPLAINT DID NOT ALLEGE NOR PROVE DAMAGES, EXCEPT THE SUM
OF P2,000.00 AS ATTORNEY'S FEES, RECEIVE A JUDGMENT FOR DAMAGES IN THE
AMOUNT OF P74,056.35 WHICH CONSISTS OF P37,121.26 PLUS LEGAL INTEREST FOR THE
32 | P a g e

CROP YEARS 1950-51 TO 1958-59 AND FOR P3,624.18 TO P4,374.78 FOR EVERY CROP
YEAR SUBSEQUENT TO 1958-59 PLUS
INTEREST? 7
We find that neither the trial nor appellate court erred in ruling for the admissibility in evidence of private respondent
Vicente's testimony. Under ordinary circumstances, private respondent Vicente 8 would be disqualified by reason of
interest from testifying as to any matter of fact occurring before the death of Praxedes T. Villanueva, such
disqualification being anchored on Section 20(a) of Rule 130, commonly known as the Survivorship Disqualification
Rule or Dead Man Statute, which provides as follows:
Section 20. Disqualification by reason of interest or relationship.-The following persons cannot
testify as to matters in which they are interested, directly or indirectly, as herein enumerated:
(a) 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.
The object and purpose of the rule is to guard against the temptation to give false testimony in regard to the transaction
in question on the part of the surviving party and further to put the two parties to a suit upon terms of equality in regard
to the opportunity of giving testimony. 9 It is designed to close the lips of the party plaintiff when death has closed the lips
of the party defendant, in order to remove from the surviving party the temptation to falsehood and the possibility of
fictitious claims against the deceased. 10
The case at bar, although instituted against the heirs of Praxedes Villanueva after the estate of the latter had been
distributed to them, remains within the ambit of the protection. The reason is that the defendants-heirs are properly the
"representatives" of the deceased, not only because they succeeded to the decedent's right by descent or operation of
law, but more importantly because they are so placed in litigation that they are called on to defend which they have
obtained from the deceased and make the defense which the deceased might have made if living, or to establish a
claim which deceased might have been interested to establish, if living. 11
Such protection, however, was effectively waived when counsel for petitioners cross-examined private respondent
Vicente. "A waiver occurs when plaintiff's deposition is taken by the representative of the estate or when counsel for the
representative cross-examined the plaintiff as to matters occurring during deceased's lifetime. 12 It must further be
observed that petitioners presented a counterclaim against private respondent Vicente. When Vicente thus took the
witness stand, it was in a dual capacity as plaintiff in the action for recovery of property and as defendant in the
counterclaim for accounting and surrender of fields nos. 4 and 13. Evidently, as defendant in the counterclaim, he was
not disqualified from testifying as to matters of fact occurring before the death of Praxedes Villanueva, said action not
having been brought against, but by the estate or representatives of the estate/deceased person.
Likewise, under a great majority of statutes, the adverse party is competent to testify to transactions or communications
with the deceased or incompetent person which were made with an agent of such person in cases in which the agent is
still alive and competent to testify. But the testimony of the adverse party must be confined to those transactions or
communications which were had with the agent. 13 The contract/promise to sell under consideration was signed by
petitioner Goi as attorney-in-fact (apoderado) of Praxedes Villanueva. He was privy to the circumstances surrounding
the execution of such contract and therefore could either confirm or deny any allegations made by private respondent
Vicente with respect to said contract. The inequality or injustice sought to be avoided by Section 20(a) of Rule 130,
where one of the parties no longer has the opportunity to either confirm or rebut the testimony of the other because

death has permanently sealed the former's lips, does not actually exist in the case at bar, for the reason that petitioner
Goi could and did not negate the binding effect of the contract/promise to sell. Thus, while admitting the existence of
the said contract/promise to sell, petitioner Goi testified that the same was subsequently novated into a verbal contract
of lease over fields nos. 4 and 13 of the Hacienda Dulce Nombre de Maria.

... Mr. Genaro Goni is also a farmer by profession and that there was no need for him to demand a
yearly accounting of the total production because the verbal lease agreement was for a term of 5
years. The defendant Mr. Genaro Goni as a sugar planter has already full knowledge as to the
annual income of said lots nos. 4 and 13, and since there was the amount of P12,460.25 to be
liquidated, said defendant never deemed it wise to demand such a yearly accounting. It was only
after or before the expiration of the 5 year lease that said defendant demanded the accounting
from the herein plaintiff regarding the production of the 2 lots that were then leased to him.

Novation takes place when the object or principal condition of an obligation is changed or altered. 14 In order, however,
that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in
unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. 15 "Novation
is never presumed. It must be established that the old and the new contracts are incompatible in all points, or that the
will to novate appear by express agreement of the parties or in acts of equivalent import. 16
The novation of the written contract/promise to sell into a verbal agreement of lease was clearly and convincingly
proven not only by the testimony of petitioner Goi, but likewise by the acts and conduct of the parties subsequent to
the execution of the contract/promise to sell. Thus, after the milling season of crop year 1949-50, only fields nos. 4 and
13 were delivered to private respondent Vicente. Fields nos. 3, 4 and 13 were subsequently registered in Villanueva's
name and mortgaged with the RFC. Villanueva likewise executed a deed of sale covering Hacienda Sarria in favor of
Joaquin Villegas. All these were known to private respondent Vicente, yet he did not take any steps toward asserting
and/or protecting his claim over fields nos. 3, 4 and 13 either by demanding during the lifetime of Villanueva that the
latter execute a similar document in his favor, or causing notice of his adverse claim to be annotated on the certificate of
title of said lots. If it were true that he made demands on Villanueva for the surrender of field no. 3 as well as the
execution of the corresponding deed of sale, he should have, upon refusal of the latter to do so, immediately or within a
reasonable time thereafter, instituted an action for recovery, or as previously observed, caused his adverse claim to be
annotated on the certificate of title. Considering that field no. 3, containing an area of three (3) hectares, 75 ares and 60
centares, is the biggest among the three lots, an ordinary prudent man would have taken these steps if he honestly
believed he had any right thereto. Yet, private respondent Vicente did neither. In fact such inaction persisted even during
the pendency of the intestate proceedings wherein he could have readily intervened to seek exclusion of fields nos. 3, 4
and 13 from the inventory of properties of the late Praxedes Villanueva.
The reason given by private respondent Vicente that field no. 3 was not delivered to him together with fields nos. 4 and
13 because there were small sugar cane growing on said field at that time belonging to TABACALERA, might be taken
as a plausible explanation why he could not take immediate possession of lot no. 3, but it certainly could not explain
why it took him four years before instituting an action in court, and very conveniently, as petitioners noted, after
Villanueva had died and at the time when the verbal contract of lease was about to expire.
Both the trial and appellate courts chose to believe in the contract/promise to sell rather than the lease agreement,
simply because the former had been reduced to writing, while the latter was merely verbal. It must be observed, though,
that the contract/promise to sell was signed by petitioner Goi as attorney-in-fact of the late Praxedes Villanueva, an
indication, to our mind, that final arrangements were made by petitioner Goi in the absence of Villanueva. It was
therefore natural for private respondent Vicente to have demanded that the agreement be in writing to erase any doubt
of its binding effect upon Villanueva. On the other hand, the verbal lease agreement was negotiated by and between
Villanueva and private respondent Vicente themselves. Being close friends and relatives 17 it can be safely assumed
that they did not find it necessary to reduce the same into writing.
In rejecting petitioners' contention respecting the verbal lease agreement, the appellate court put much weight on the
failure of petitioners to demand an accounting of the produce of fields nos. 4 and 13 from 1950 to 1954, when the action
for recovery of property was filed. Such failure was satisfactorily explained by petitioners in their motion for
reconsideration filed before the then Court of Appeals, in this manner:

33 | P a g e

It is the custom among the sugar planters in this locality that the Lessee usually demands an
advance amount to cover the rental for the period of the lease, and the demand of an accounting
will be only made after the expiration of the lease period. It was adduced during the trial that the
amount of P12,460.75 was considered as an advance rental of the 2 lots which was leased to the
Plaintiff, lots nos. 4 and 13; so we humbly believe that there was no necessity on the part of
defendant Mr. Genaro Goi to make a yearly demand for an accounting for the total production of 2
parcels leased to the plaintiff. 18
Petitioners, having clearly and sufficiently shown that the contract/promise to sell was subsequently novated into a
verbal lease agreement, it follows that they are entitled to a favorable decision on their counterclaim. Discussion of the
third issue raised therefore becomes unnecessary.
WHEREFORE, the decision appealed from is hereby reversed. The judicial administrator of the estate of private
respondent Gaspar Vicente and/or his successors-in-interest are hereby ordered to: a) surrender possession of fields
nos. 4 and 13 of the Hacienda Dulce Nombre de Maria to petitioners; b) render an accounting of the produce of said
fields for the period beginning crop-year 1950-51 until complete possession thereof shall have been delivered to
petitioners; and c) to pay the corresponding annual rent for the said fields in an amount equivalent to 15% of the gross
produce of said fields, for the periods beginning crop-year 1950-51 until said fields shall have been surrendered to
petitioners, deducting from the amount due petitioners the sum of P12,460.24 advanced by private respondent Gaspar
Vicente.
SO ORDERED.

G.R. No. 27498

September 20, 1927

Inestate estate of Marcelino Tongco, represented by JOSEFA TONGCO, administratrix, plaintiff-appellant,

vs.
ANASTACIA VIANZON, defendant-appellee.
M. H. de Joya and Enrique Tiangco for appellant.
Vicente J. Francisco for appelle.
MALCOLM, J.:
The fundamental question which is being litigated in this case and its companion case, R. G. No. 27499, 1 is whether the
property in dispute should be assigned to the estate of Marcelino Tongco, or whether it should be set aside as belonging
exclusively to the widow.
Marcelino Tongco and Anastacia Vianzon contracted marriage on July 5, 1894. The first named died on July 8, 1925,
leaving the second named as his widow. The niece of the deceased, Josefa Tongco, was named administratrix of the
estate. It appears that shortly before the death of Marcelino Tongco, he had presented claims in a cadastral case in
which he had asked for titles to certain properties in the name of the conjugal partnership consisting of himself and his
wife, and that corresponding decrees for these lots were issued in the name of the conjugal partnership not long after
his death.
In the cadastral case, the widow began action on April 28, 1926, when she presented a motion for a revision of certain
decrees within the one-year period provided by the Land Registration Law. Issue was joined by the administratrix of the
estate. A decision was rendered by Judge of First Instance Rovira concluding with this pronouncement of a judgment:
"Therefore, and by virtue of the provisions of section 38 of Act. No. 496, decrees Nos. 191390, 191504, and 190925,
relative to lots Nos. 1062, 1263, and 491 of this cadastral record, as well as the original certificates of title Nos. 3247,
3298, and 3297 in regard thereto, and hereby annulled and set aside, and it is ordered that in lieu thereof new decrees
and certificates of title be issued for lots Nos. 1062, 1263, and 491, as the exclusive property of Anastacia Vianzon, of
legal age, widow, and resident of Orani Bataan, free from all encumbrances and liens. In regard to lot No. 460, the court
sustains the decree already issued in due time with respect to said lot." Sometime later, a motion for a new trial was
presented with accumulated affidavits by counsel for the losing party. This motion was denied by the trial judge.
On July 19, 1926, the administratrix of the estate began action against Anastacia Vianzon for the recovery of specified
property and for damages. The issue was practically the same as in the cadastral case Judgment was rendered by
Judge Rovira couched in the following language: "Therefore, the court renders judgment absolving the defendant from
the complaint in this case, and only declares that one- half of the value of the shares in theSociedad Cooperativa de
Credito Rural de Orani, to the amount of ten pesos (P10), belonging to the intestate estate of Marcelino Tongco, which
one-half interest must appear in the inventory of the property of the estate of the deceased Marcelino Tongco." The
motion for a new trial was denied by His Honor, the trial judge.
From both of the judgments hereinbefore mentioned, the administratrix of the estate of Marcelino Tongco had appealed.
The first action filed, which was in the cadastral case, has now become the last in number and is 27399. The second
action filed in the property case has now become the first in number and is 27498. As pursuant to the agreement of the
parties the two cases were tried together, they can be best disposed of together on appeal.

34 | P a g e

The first, third, fourth, and fifth errors assigned in the property case and the second error assigned in the cadastral case
primarily concern findings of fact and relate to the discretionary power of the trail judge. The second error assigned in
the property case and the first error assigned in the cadastral case attack the ruling of the trial judge to the effect that
the widow was competent to testify.
It is true that by reason of the provisions of article 1407 of the Civil Code the presumption is that all the property of the
spouses is partnership property in the absence of proof that it belongs exclusively to the husband or to the wife. But
even proceeding on this assumption, we still think that the widow has proved in a decisive and conclusive manner that
the property in question belonged exclusively to her, that is, it would, unless we are forced to disregard her testimony.
No reversible error was committed in the denial of the motion for a new trial for it is not at all certain that it rested on a
legal foundation, or that if it had been granted it would have changed the result.
Counsel for the appellant, however, asserts that if the testimony of the widow be discarded, as it should be, then the
presumption of the Civil Code, fortified by the unassailable character of Torrens titles, arises, which means that the
entire fabric of appellee's case is punctured. Counsel relies on that portion of section 383 of the Code of Civil Procedure
as provides that "Parties or assignors of parties to an action or proceeding, or persons in whose behalf an action or
proceeding is prosecuted, against an executor or administrator or other representative of a deceased person, . . ., upon
a claim or demand against the estate of such deceased person . . ., cannot testify as to any matter of fact occurring
before the death of such deceased person . . . ." Counsel is eminently correct in emphasizing that the object and
purpose of this statute is to guard against the temptation to give false testimony in regard to the transaction is question
on the part of the surviving party. He has, however, neglected the equally important rule that the law was designed to
aid in arriving at the truth and was not designed to suppress the truth.
The law twice makes use of the word "against." The actions were not brought "against" the administratrix of the estate,
nor were they brought upon claims "against" the estate. In the first case at bar, the action is one by the administratrix to
enforce demand "by" the estate. In the second case at bar, the same analogy holds true for the claim was presented in
cadastral proceedings where in one sense there is no plaintiff and there is no defendant. Director of Lands vs. Roman
Catholic Archibishop of Manila [1920], 41 Phil., 120 nature of cadastral proceedings; Fortis vs. Gutierrez Hermanos
[1906], 6 Phil., 100 in point by analogy; Maxilom vs. Tabotabo [1907], 9 Phil., 390 and Kiel vs. Estate of P. S. Sabert
[1924], 46 Phil., 193 both clearly distinguishable as can be noted by looking at page 197 of the last cited case;
Sedgwick vs. Sedgwick [1877], 52 Cal., 336, 337; Myersvs. Reinstein [1885], 67 Cal., 89; McGregor vs. Donelly [1885],
67 Cal., 149, 152; Booth vs. Pendola [1891], 88 Cal., 36; Bernardis vs. Allen [1902], 136 Cal., 7; Calmon vs. Sarraille
[1904], 142 Cal., 638, 642; Bollinger vs.Wright [1904], 143 Cal., 292, 296; Whitney vs. Fox [1897], 166 U. S. 637, 648.)
Moreover, a waiver was accomplished when the adverse party undertook to cross-examine the interested person with
respect to the prohibited matters. (4 Jones on Evidence, pp. 767 et seq.; Stair vs. McNulty [1916], 133 Minn., 136; Ann.
Cas., 1918D 201.) We are of the opinion that the witness was competent.
The result, therefore, must be to adhere to the findings and rulings of the trial judge. No prejudicial error is noted in the
proceedings.
Judgment affirmed, with the costs of this instance against the appellant.

G.R. No. L-2016

August 23, 1949
Testate estate of RICHARD THOMAS FITZSIMMONS, deceased, MARCIAL P. LICHAUCO, administrator-appellee,
vs.
ATLANTIC, GULF and PACIFIC COMPANY OF MANILA, claimant-appellant.
Perkins, Ponce Enrile, Contreras and Gomez and Taada, Pelaez and Teehankee for appellant.
Roxas, Picazo and Mejia for appellee.
OZAETA, J.:
This is an appeal from a judgment of the Court of First Instance of Manila denying appellant's claim of P63,868.67
against the estate of the deceased Richard T. Fitzsimmons, and granting appellee's counterclaim of P90,000 against the
appellant.
That appellant Atlantic, Gulf and Pacific Company of Manila is a foreign corporation duly registered and licensed to do
business in the Philippines, with its office and principal place of business in the City of Manila.
Richard T. Fitzsimmons was the president and one of the largest stockholders of said company when the Pacific war
broke out on December 8, 1941. As such president he was receiving a salary of P3,000 a month. He held 1,000 shares
of stocks, of which 545 shares had not been fully paid for, but for which he had executed promissory notes in favor of
the company aggregating P245,250, at the rate P450 a share. In 1941 the sum of P64,500 had been credited in his
favor on account of the purchase price of the said 545 share of stock out of bonuses and dividends to which he was
entitled from the company. Under his agreements with the company dated April 4 and July 12, 1939, should he die
without having fully paid for the said 545 shares of stock, the company, at its option, may either reacquire the said 545
shares of stock by returning to his estate the amount applied thereon, or issue in favor of his estate the corresponding
number of the company's shares of stock equivalent to the amount paid thereon at P450 a share.
Soon after the Japanese army occupied Manila in January, 1942, it seized and took possession of the office and all the
properties and assets of the appellant corporation and interned all its officials, they being American citizens.
Richard T. Fitzsimmons died on June 27, 1944, in the Santos Tomas interment camp, and special proceeding No. 70139
was subsequently instituted in the Court of First Instance of Manila for he settlement of his estate.
The Atlantic, Gulf and Pacific Company of Manila resumed business operation in March, 1945.
In due course the said company filed a claim against the estate of Richard T. Fitzsimmons which, as amended,
consisted of the following items:
A. Personal overdraft of Richard T. Fitzsimmons with Atlantic,
Gulf and Pacific Company of Manila in current
account ...................................................................

P63,000.00

B. Charges from San Francisco agent of the company not

included in above figure A as of November 30, 1945 (P1,002),
less subsequent credit advice from San Francisco agent
(P133.33) .............................................................................

868.67

Total ....................................................................................

In the same claim the company offered to require the 545 shares sold to the deceased Fitzsimmons upon return to his
estate of the amount of P64,500 paid thereon, and asked the court to authorize the setoff of the amount of its claim of
P63,868.67 from the amount of P64,500 returnable to the estate.
In his answer to the amended claim the administrator denied the alleged indebtedness of the deceased to the claimant,
expressed his conformity to the refund of P64,500 by the claimant to the estate and the retransfer by the latter to the
former of the 545 shares of stock, and set up a counterclaim of P90,000 for salaries allegedly due the deceased from
the claimant corresponding to the years 1942, 1943, and the first half of 1944, at P36,000 per annum.
The issues raised by this appeal are:
1. Whether appellant's claims of P63,000 and P868.67 have been established by satisfactory evidence; and
2. Whether the deceased Richard T. Fitzsimmons was entitled to his salary as president of the Atlantic, Gulf & Pacific
Company of Manila from January, 1942, to June 27, 1944, when he died in the Santo Tomas internment camp.
I. Upon the claim of P63,000 (item A) the evidence for the claimant consisted of the testimony of Santiago Inacay and
Modesto Flores, chief accountant and assistant accountant, respectively, of the Atlantic, Gulf & Pacific Company of
Manila. (It is admitted that all the prewar books and records of the company were completely destroyed or lost during
the war.)
Santiago Inacay testified in substance as follows: He was chief of the accounting department of the Atlantic, Gulf &
Pacific Company from June, 1930, to December, 1941, and from March, 1945, to the present. The officers of the
company had the privilege of maintaining personal accounts with the company. The deceased Fitzsimmons maintained
such an account, which consisted of cash advances from the company and payments of bills from outside for his
account. On the credit side were entered the salaries of the official and the payments made by him. "The personal
account of Mr. Fitzsimmons, in the year 1941, was on the debit balance; that is, he owed money that debit account of
Mr. Fitzsimmons, basing on your recollections? A. In my collections of the account, personal account of Mr.
Fitzsimmons, as of the last statement of account rendered in the year 1941, it was around P63,000." At the end of each
month the accounting department rendered to the deceased a statement of his account showing the balance of his
account, and at the bottom of that correctness of the balance. The last statement of account rendered to the deceased
was that corresponding to the month of November, 1941, the office of the company having closed on December 29,
1941. Asked how it was possible for him to remember the status of the personal account of Mr. Fitzsimmons, he replied:
"As Mr. Fitzsimmons was the president and member of the board of directors, I have to remember it, because it is very
shameful on my part that when the said officer and other officers of the company come around and ask me about their
balance, I could not tell them the amount of their balance, although not in exact figures, at least in round figures." This
witness further testified on direct examination as follows:
Q. You said that Mr. Fitzsimmons is one of those office whose personal account with the Atlantic, Gulf &
Pacific Co. used to be on the debit side in the years previous to 1941. Can you tell the Honorable Court what
would happen at the end of each year to the personal account, and to the status of the personal account of
Mr. Fitzsimmons? A. At the each year, after the declaration of dividends on paid shares, bonuses and
directors' fees, the account will balance to a credit balance. In other words, at the start of the following years,
the account will be on the credit side.

P63,868.67
Q. So that I gather from you, Mr. Inacay, that the personal account of Mr. Fitzsimmons, as well as the other
officers of the Atlantic, Gulf & Co., at the end of each year, and at the beginning of the incoming year,

35 | P a g e

generally, would be in the credit balance; because of the application of dividends on paid shares, bonuses
and the directors' fees? A. Yes, sir. (Page 80, t. s. n.)
On cross-examination the witness admitted that he could not recollect the amount of the balance, either debit or credit,
of each of the Americans and other employees who maintained a current account with the company; and on redirect
examination he explained that he remembered the balance of the account of Mr. Fitzsimmons "because as account I
should be I should have knowledge more or less, of the status of the account of the president, the treasurer, and the
rest of the directors."
Modesto Flores testified in substance as follows: He was assistant accountant of the Atlantic, Gulf & Pacific Company
from October 1, 1935, to December, 1941, and from March 8, 1945, to the present. In 1941, Mr. Fitzsimmons, president
of the company, had a personal account with the latter consisting of cash advances which he withdrew from the
company and of payments for his account of groceries, automobile, salary of his chauffeur, gasoline and oil, and
purchases of furniture for his house and other articles for his personal use. On the credit side of his account were
entered his monthly salaries, the dividends declared, if any, the bonuses, and the director's fees. Witness was the one
who as accountant made the entries in the books of the company. When Mr. Fitzsimmons withdrew funds by way of
cash advances from the company, he signed receipts therefor which were delivered to the cashier, who in turn delivered
them to him. When creditors of Mr. Fitzsimmons presented bills to the accounting department for payments, those bills
were approved by Mr. Fitzsimmons and the company paid them and charged them to his account. All the books,
receipts, papers, documents, and accounts referring to the personal account of Mr. Fitzsimmons were lost during the
war. Witness remembered that the personal account of Mr. Fitzsimmons on December 29, 1941, was on the debit side,
amounting to P63,000 more or less, according to his best recollection. On cross-examination he testified that in the
absence of the records he could not state what part of the P63,000 represented cash advances and what part
represented payments made by the company to the creditors of Mr. Fitzsimmons.
Aside from Santiago Inacay and Modesto Flores, the claimant also called as witnesses Mr. Henry J. Belden and Mr.
Samuel Garmezy, vice-president-treasurer and president, respectively, of the claimant company, to testify on the status
of the personal account of the deceased Fitzsimmons with the company as of December, 1941; but upon objection of
the administrator the trial court refused to admit their testimony on that point on the ground that said witnesses were
incompetent under section 26(c) of Rule 123, they being not only large stockholders and members of the board of
directors but also vice-president-treasurer and president, respectively, of the claimant company.
In view of the ruling of the trial court, counsel for he claimant stated in the record that Mr. Belden, if permitted to testify,
would testify as follows: That the deceased Fitzsimmons, being president of the Atlantic, Gulf and Pacific Company in
the year 1941, had a current account with said company which, upon the outbreak of the war in December, 1941, had a
debt balance against him of P63,000, and that said sum or any part thereof had not been paid. At the suggestion of the
court counsel asked his witness whether, if permitted, he really would so testify, and the witness answered in the
affirmative, whereupon the court said: "Let Attorney Gomez's offer of testimony ratified by the witness Mr. Belden be
made of record."
With regard to the witness Mr. Garmezy, counsel for the claimant also made the following offer of proof, to wit: That if
said witness were allowed to testify, he would testify as follows:
That sometimes in Novembersometime during the last days of November, or the first days of December,
1941he received a copy of the trial balance sheet, and in that trial balance sheet, among other things, the
personal accounts of each and every one of the officers of the Atlantic, Gulf and Pacific Co., including himself,
and also the deceased R. T. Fitzsimmons, appear; and that this witness would also testify to the fact that on
that occasion he checked up his own personal record with the entries appearing in the said trial balance
sheet, and he then had occasion to find out that the account of the deceased Fitzsimmons with the Atlantic,
36 | P a g e

Gulf and Pacific Co. was a debit account in the amount of around sixty-three thousand pesos, while the
personal account of Mr. Garmezy, the witness now testifying, showed a credit account in the sum of around
sixty-three thousand pesos. This witness will also testify that this account of sixty-three thousand pesos owed
by Mr. Fitzsimmons appeared in that trial balance, which he had occasion to read in the first days of
December, 1941, was not paid by Mr. Fitzsimmons until the present date. (Pages 35-36, t. s. n.)
That offer of proof was likewise ratified by the witness Garmezy and made of record by the trial court.
The evidence for the administrator against this claim of P63,000 consisted of Exhibit 1 and the testimony of Mr. Marcial
P. Lichauco explaining the circumstances under which said document was prepared and signed by the deceased
Fitzsimmons. It appears that on December 15, 1942, Richard Thomas Fitzsimmons sued his wife Miguela Malayto for
divorce in the Court of First Instance of Manila. On August 9, 1943, after due trial, the court rendered judgment granting
plaintiff's petition for divorce and ordering the dissolution of the marriage between the parties. Attorney Lichauco
represented the plaintiff in that divorce case. After the decree of divorce had become final the plaintiff Fitzsimmons,
pursuant to the provisions of the divorce law then in force, submitted to the court an inventory of the assets and
liabilities of the conjugal partnership, with a proposed adjudication or division of the net assets among the ex-pouses
and their children. A carbon copy of said inventory, which was signed by Richard Thomas Fitzsimmons on November 9,
1943, and filed in the Court of First Instance of Manila on the same date in civil case No. 296, was presented by the
administrator as Exhibit 1 in this case and admitted by the trial court over the objection of the claimant. The
administrator Mr. Lichauco testified herein that as attorney for Mr. Fitzsimmons in the divorce case he prepared the said
inventory from the data furnished him by Mr. Fitzsimmons after he had conferred with and explained to the latter why it
was necessary to prepare said inventory, telling him that under the divorce law the conjugal properties had to be
liquidated; that since he (Fitzsimmons) was married to Miguela Malayto in the year 1939, he had to include in said
inventory all the properties acquired by him between the date of his marriage and the date of his divorce, and that all the
obligations incurred by him and not yet paid during the same period should be included because they had to be
deducted from the assets in order to determine the net value of the conjugal properties; that he made it very clear to Mr.
Fitzsimmons that he should not forget the obligations he had because they would diminish the amount his wife was
going to receive, and that any obligation not included in the inventory would be borne by him alone after his wife had
received her share.
According to Exhibit 1 the gross value of the assets of the conjugal partnership between the deceased Fitzsimmons and
his wife Miguela Malayto as of November, 1943, was P174,700, and the total amount of the obligations was P30,082.
These obligations consisted of only two itemsone of P21,426 in favor of the Peoples Bank and Trust Company and
another of P8,656 in favor of the Philippine Bank of Commerce. In other words, no obligation whatsoever in favor of the
Atlantic, Gulf and Pacific Company of Manila was listed in said inventory Exhibit 1. And upon that fact the administrator
based his opposition to the claim in question.
Before weighing the evidence hereinabove set forth to determine whether it is sufficient to prove appellant's claim of
P63,000, it necessary for us to pass upon appellant's first and third assignments of error referring, respectively, to the
trial court's rejection of the testimony of the witnesses Belden and Garmezy and its admission of Exhibit 1.
The question raised by the first assignment of error is whether or not the officers of a corporation which is a party to an
action against an executor or administrator of a deceased person are disqualified from testifying as to any matter of fact
occurring before the death of such deceased person, under Rule 123, section 26(c), of the Rules of Court, which
provides:
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.
This provision was taken from section 383, paragraph 7, of our former Code of Civil Procedure, which in turn was
derived from section 1880 of the Code of Civil Procedure of California.
In the case of City Savings Bank vs. Enos, 135 Cal., 167; 67 Pac., 52, 55, the Supreme Court of California, interpreting
said article 1880, said:
. . . The provision applies only to parties or assignors of parties, and Haslam was neither the one nor the
other. If he was a stockholder, which it is claimed he was, that fact would make no difference, for interest no
longer disqualifies under our law, Civ. Code Proc. sec. 1879. Appellant cites section 14, Civ. Code, to the
effect that the word "person" includes a corporation; and claims that, as the corporation can only speak
through its officers, the section must be held to apply to all who are officially related to section must be held to
apply to all who are officially related to the corporation. A corporation may be conceded to be a person, but
the concession does not help appellant. To hold that the statute disqualifies all persons from testifying who
are officers or stockholders of a corporation would be equivalent to materially amending the statute by judicial
interpretation. Plainly the law disqualifies only "parties or assignors of parties," and does not apply to persons
who are merely employed by such parties or assignors of parties.
In a later case, Merriman vs. Wickersman, 141 Cal., 567; 75 Pac., 180, 181-182, the same tribunal, in passing upon the
competency of a vice-president and principal stockholder of a corporation to testify, reaffirmed its ruling in City Savings
Bank vs. Enos, supra, after examining decisions of other state supreme courts in relation to their respective statutes on
the same subject. The court said:
The Burnham and Marsh Company is a corporation. Mr. Marsh, vice-president and one of its principal
stockholders, was allowed to testify to matters and facts in issue. It is contended that the evidence was
improperly admitted, in violation of section 1880 of the Code of Civil Procedure, which provides that "the
following persons cannot be witnesses: . . . Parties or assignors of parties to an action or proceeding, or
persons in whose behalf an action or proceeding is prosecuted, against an executor or administrator, upon a
claim or demand against the estate of a deceased person, as to any matter of fact occurring before the death
of such deceased person." At common law interest disqualified any person from being a witness. That rule
has been modified by statute. In this state interest is no longer a disqualification, and the disqualifications are
only such as the law imposes. Code Civ. Proc., sec. 1879. An examination of the authorities from other states
will disclose that their decisions rest upon the wordings of their statutes, but that generally, where interest in
the litigation or its outcome has ceased to disqualify, officers and directors of corporations are not considered
to be parties within the meaning of the law. In example, the statute of Maryland (Pub. Gen. Laws, art. 35, sec.
2) limits the disability to the "party" to a cause of action or contract, and it is held that a salesman of a
corporation, who is also a director and stockholder, is not a party, within the meaning of the law, so as to be
incompetent to testify in an action by the company agaisnt the other party, who is insane or dead. Flach vs.
Cottschalk Co., 88 Md., 368; 41 Atl., 908; 42 L. R. A., 745; 71 Am. St. Rep., 418 To the contrary, the Michigan
law expressly forbids "any officer or agent of a corporation" to testify at all in relation to matters which, if true,
must have been equally within the knowledge of such deceased person. Howell's Ann. St. Mich. sec. 7545.
The Supreme Court of Michigan, in refusing to extend the rule to agents of partnership, said: "It is conceded
that this testimony does not come directly within the wording of the statute, but it is said there is the same
reason for holding the agent of a partnership disqualified from testifying that there is in holding the agent of a
corporation. This is an argument which should be directed to the legislative rather than to the judicial
department of government. . . . The inhibition has been put upon agents of corporations, and has not been
put upon agents of partnerships. We cannot, by construction, put into the statute what the Legislature has not
37 | P a g e

seen fit to put into it." Demary vs. Burtenshaws" Estate (Mich.), 91 N. W., 649. In New York the statute
provides that against the executor, administrator, etc., "no party or person interested in the event, or person
from, through, or under whom such party or interested person derives his interest or title shall be examined
as a witness in his own behalf or interest." This is followed by the exception that a person shall not be
deemed interested by reason of being a stockholder or officer of any banking corporation which is a party to
the action or proceeding or interested in the event thereof. Ann. Code Civ. Proc. N. Y., sec. 829. Here it is
apparent that the interest of the witness is made a disqualification, and it is of course held that stockholder
and officers of corporations other than banking corporations are under disqualification. Keller vs. West
Bradley Mfg. Co., 39 Hun, 348.
To like effect is the statute of Illinois, which declares that no party to any civil action, suit or proceedings, or
person directly interested in the event thereof shall be allowed to testify under the given circumstances.
Under this statute it is held that stockholders are interested, within the meaning of the section, and are
incompetent to testify against the representatives of the deceased party. Albers Commission Co. vs. Sessel,
193 Ill., 153, 61 N. E., 1075. The law of Missouri disqualifies "parties to the contract or cause of action," and it
is held that a stockholder, even though an officer of the bank, is not disqualified by reason of his relation to
the corporation when he is not actually one of the parties to the making of the contract in the interest of the
bank.
Our own statute, it will be observed, is broader than any of these. It neither disqualifies parties to a contract
nor persons in interest, but only parties to the action (Code Civil Procedure, sections 1879, 1880); and thus it
is that in City Savings Bank vs. Enos, 135 Cal., 167, 67 Pac., 52, it has been held that one who is cashier and
at the same time a stockholder of a bank was not disqualified, it being said: "to hold that the statute
disqualifies all persons from testifying who are officers or stockholders of a corporation would be equivalent to
materially amending the statute by judicial interpretation." It is concluded, therefore, that our statute does not
exclude from testifying a stockholder of a corporation, whether he be but a stockholder, or whether, in addition
thereto, he be a director or officer thereof.
The same view is sustained in Fletcher Cyclopedia Corporations, Vol. 9, pages 535-538; in Jones on Evidence, 1938
Ed. Vol. 3, page 1448; and in Moran on the Law of Evidence in the Philippines, 1939 Ed. pages 141-142.
The appellee admits in his brief in those states where the "dead man's statute" disqualifies only parties to an action,
officers and stockholders of the corporation, have been allowed to testify in favor of the corporation, while in those
states where "parties and persons interested in the outcome of the litigation" are disqualified under the statute, officers
and stockholders of the corporation have been held to be incompetent to testify against the estate of a deceased
person.
The weight of authority sustains appellant's first assignment of error. Inasmuch as section 26(c) of Rule 123 disqualifies
only parties or assignors of parties, we are constrained to hold that the officers and/or stockholders of a corporation are
not disqualified from testifying, for or against the corporation which is a party to an action upon a claim or demand
against the estate of a deceased person, as to any matter of fact occurring before the death of such deceased person.
It results that the trial court erred in not admitting the testimony of Messrs. Belden and Garmezy. It is not necessary,
however, to remand the case for the purpose of taking the testimony of said witnesses because it would be merely
corroborative, if at all, and in any event what said witnesses would have testified, if permitted, already appears in the
record as hereinabove set forth, and we can consider it together with the testimony of the chief accountant and the
assistant accountant who, according to the appellant itself, were "the only ones in the best of position to testify on the
status of the personal account" of the deceased Fitzsimmons.

The third assignment of error raises the question of the admissibility of Exhibit 1. Appellant contends that it is a selfserving declaration, while appellee contends that it is a declaration against interest.
A self-serving declaration is a statement favorable to the interest of the declarant. It is not admissible in evidence as
proof of the facts asserted. "The vital objection to the admission of this kind of evidence is its hearsay character.
Furthermore such declarations are untrustworthy; to permit their introduction in evidence would open the door to frauds
and perjuries." (20 Am. Jur., Evidence, sec. 558, pages 470-471.).
On the other hand, a declaration against the interest of the person making it is admissible in evidence, notwithstanding
its hearsay character, if the declaration is relevant and the declarant has died, become insane, or for some other reason
is not available as a witness. "The true test in reference to the reliability of the declaration is not whether it was
made ante litem motam, as is the case with reference to some classes of hearsay evidence, whether the declaration
was uttered under circumstances justifying the conclusion that there was no probable motive to falsify." (Id., section 556,
pp. 467-468.)
Insofar, at least, as the appellant was concerned, there was no probable motive on the part of Fitzsimmons to falsify his
inventory Exhibit 1 by not including therein appellant's present claim of P63,000 among his obligations or liabilities to be
deducted from the assets of the conjugal partnership between him and his divorced wife. He did not know then that he
would die within one year and that the corporation of which he was the president and one of the largest stockholders
would present the claim in question against his estate. Neither did he know that the books and records of that
corporation would be destroyed or lost. Yet, although he listed in said inventory his obligations in favor of the Peoples
Bank and Trust Company and the Philippine Bank of Commerce aggregating more than P30,000, he did not mention at
all any obligation in favor of the corporation of which he was the president and one of the largest stockholders.
Assuming that he owed his corporation P63,000 for which he signed receipts and vouchers and which appeared in the
books of said corporation, there was no probable motive for him not to include such obligation in the inventory Exhibit 1.
It would have been to his interest to include it so that his estranged and divorced wife might share in its payment. The
net assets appearing in Exhibit 1 amounted to P144,618, one-half of which was adjudicated to the children and the
other half was divided between the spouses, so that each of the latter received only P36,154.50. By not including the
obligation of P63,000 claimed by the appellant (assuming that he owed it), Fitzsimmons' adjudicated share in the
liquidation of the conjugal partnership would be short by nearly P27,000 to meet said claim, whereas by including said
obligation he would have received a net share of more than P10,000 free from any liability.
We find no merit, that Exhibit 1, insofar as the commission therefrom of the claim in question was concerned, far from
being self-serving to, was a declaration against the interest of, the declarant Fitzsimmons. He having since died and
therefore no longer available as a witness, said document was correctly admitted by the trial court in evidence.
We have no reason whatsoever to doubt the good faith of Messrs. Samuel Garmezy and Henry J. Belden, president and
vice-president-treasurer, respectively, of the claimant corporation, in presenting the claim of P63,000 against the estate
of Fitzsimmons, nor the good faith of the administrator Mr. Marcial P. Lichauco in opposing said claim. They are all men
of recognized integrity and of good standing in society. The officers of the claimant corporation have shown
commendable fairness in their dealings with the estate of Fitzsimmons. They voluntarily informed the administrator that
Fitzsimmons had paid P64,500 on account of the purchase price of 545 shares of stock of the company, and not
P45,000 only, as the administrator believed. Likewise, they voluntarily informed him in connection with his claim for
Fitzsimmons' back salaries that Fitzsimmons' annual salary was P36,000 and not P30,000, as the administrator
believed. We can therefore readily assume that Messrs. Garmezy and Belden believed in good faith that the books of
the corporation showed a debit balance of around P63,000 as of the outbreak of the Pacific war on December 8, 1941.

38 | P a g e

On the other hand, if Mr. Fitzsimmons, who was the president and one of the largest stockholders of the claimant
corporation, really owed the latter around P63,000 on December 8, 1941, and had not paid it before he liquidated his
conjugal partnership in November, 1943, as a consequence of the decree of divorce he obtained against his wife, we
see no reason why did not include such obligation in said liquidation. Judging from the high opinion which the officers
and stockholders of the corporation entertained of Fitzsimmons as shown by their resolution hereinafter quoted, they
cannot impute bad faith to him in not acknowledging the claim in question.
There is a possible explanation of this seemingly irreconcilable conflict, which in the absence of other proofs we
consider satisfactory but which both parties seem to have overlooked. We find it in the testimony on direct examination
of appellant's witness Santiago Inacay, page 80 of the transcript, hereinabove quoted. According to Inacay, at the end of
each year, after the declaration of dividends, bonuses, and director's fees, the account of Fitzsimmons was brought up
to a direct balance. "In other words," he said, "at the start of the following year the account will be on the credit side."
Not satisfied with that categorical statement, counsel for the appellant asked his own witness the following question and
the witness gave the following answer:
Q. So that I gather from you, Mr. Inacay, that the personal account of Mr. Fitzsimmons, as well as the officers
of the Atlantic, Gulf and Pacific Co., at the end of each year, and at the beginning of the incoming year,
generally, would be in the credit balance; because of the application of dividends on paid shares, bonuses,
and director's fees? A. Yes, sir.
Q. In the year, 1941, therefore, no declaration of dividends for the last six months-there were no declarations
of director's fees . . . I withdraw the question, and that is all.
It is to be regretted that neither counsel for the appellant nor counsel for the appellee pursued the examination of the
witness to determine, if possible, the approximate amount of the dividends, bonuses, and director's fees that would have
been credited to Fitzsimmons as of the end of the year 1941. But enough appears in the testimony to warrant the
deduction that had the war not forced the corporation to close office on December 29, 1941, dividends, bonuses, and
director's fees for the year 1941 would, as of the and of that year, have been declared and credited to the account of
Fitzsimmons, which as in previous years would or might have brought that account on the credit side. President
Garmezy reported to the meeting of the stockholders that the volume of work performed by the company in 1941
"exceed that of 1940." (Exhibit 2.) We cannot assume that the company earned less profits in 1941 than in 1940.
Probably the reason why Fitzsimmons did not include or mention any obligation in favor of his own corporation in his
inventory Exhibit 1 was that he believed he was entitled to be credited by said corporation with dividends, bonuses, and
director's fees corresponding to the year 1941, which as in previous years would bring his account on the credit side. If
that was the case, the company was technically correct in asserting that at the outbreak of the Pacific war in December,
1941, its books showed a debit balance against Fitzsimmonsno dividends, bonuses, and director's fees having been
actually declared and credited to Fitzsimmons at that time. But we think Fitzsimmons was justified in considering his
account was having to all intends and purposes been brought on the credit side; because if such dividends, bonuses,
and director's fees had been earned, the fact that they were not actually declared and credited to him, should not
prejudice him the subsequent loss of the company's properties and assets as a result of the war should be borne by the
company and not by its officers.
Leaving the foregoing reflections aside, we are confronted only, on the one hand, by the oral testimony of the witnesses
for the claimant based entirely on their memory as to the status of Fitzsimmons' account, and not on the other by Exhibit
1, which contradicts said testimony. Realizing the frailty and unreability of human memory, especially with regard to
figures, after the lapse of more than five years, we find no sufficient basis upon which to reverse the trial court's finding
that this claim had not been satisfactorily proven.

With reference to the item of P868.67, we find it to have been sufficiently proven by the testimony of Santiago Inacay
and Modesto Flores, supported by the documents Exhibit A, B, C, and D, which establish the fact that in November and
December, 1941, the San Fracisco agent of the company deposited in the Crocker First National Bank of San Francisco
the total sum of $500 to the account of Fitzsimmons, which said agent debited against the company. Debit notices of the
deposits were not received by the company until after the liberation. The administrator admitted in his testimony that
after the death of Fitzsimmons' account in the sum of P1,788.75. Aside from that debit of P1,000, against also paid $1 or
P2 for Fitzsimmons' subscription to the San FraciscoChronicle, making a total of P1,002. From this was deducted a
credit of P133.33, consisting of a payment made on June 30, 1946, by a creditor of Fitzsimmons named J. H. Chew as
testified to by Mr. Flores and supported by Exhibit E, leaving a balance of P868.67.
The trial court therefore erred in not allowing said claim.
II. We shall now pass upon appellant's fourth assignment of error, which assails the trial court's granting of appellee's
counterclaim of P90,000 for salaries allegedly due to the deceased Fitzsimmons as president of the appellant
corporation for the years 1942, 1943, and the first six months of 1944.
The undisputed facts are: Fitzsimmons was the president of the appellant corporation in 1941 with a salary of P36,000 a
year. The corporation was forced to suspend its business operations from December 29, 1941, to March 8, 1945, on
account of the war, its office and all its properties having been seized by the Japanese invader. Fitzsimmons, together
with the other officers of the corporation, was interned by the enemy in the Santo Tomas internment camp, where he
died on June 27, 1944.
At the annual meeting of the stockholders of the corporation held on January 21, 1946, the president, S. Garmezy,
reported among other things as follows:
While interned, the Company borrowed money on notes signed by Mr. Fitzsimmons and Mr. Garmezy; money
was also received for the same purpose without signing of notes. Mr. Kihlstedt, who before the war was
Superintendent of the Philippine Iron Mines, helped a great deal in obtaining this money, bringing it to Camp
and distributing it to families living outside the Camp. Mr. Kihlstedt being a Swedish citizen, was able to live
outside and he did some very good work.
And in that meeting the following resolutions, among others, were approved:
RESOLVED, that all acts in 1941 through 1945 of the Directors in office since their election in 1941 and
elected in the interim, as duly recorded in the minutes of the meetings of the Board, are hereby approved,
ratified and confirmed, and are to be accepted as acts of this corporation.

Based upon those facts, the trial court granted the "back pay" claimed by the appellee.
There was no resolution either of the stockholders of the board of directors of the company authorizing the payment of
the salaries of the president or any other officer or employee of the corporation for the period of the war when the
corporation was forced completely to suspend its business operations and when its officers were interned or virtually
held prisoners by the enemy.
The theory of the appellee, which was sustained by the trial court, is that as long as a corporation officer with a fixed
salary retains the office he is entitled to that salary notwithstanding his inability to perform his duties. The main case
cited by the appellee in support of his theory is Brown vs. Galvenston Wharf Co., 50 S. W., 126, 128; 92 Tex., 520. In
that case the president of the defendants corporation claimed his salary for a period of almost eleven months, during
which he was on an indefinite leave of absence, and the court allowed it, holding that "so long as he remained the
president of the company, the salary was an incident to the office, and ran with it for the whole time, although he may
have failed to perform the duties of president for any given part of such time."
If such a sweeping pronouncement is to be applied regardless of whether or not the corporation was in operation during
the period covered by the claim for the salary, as seems to be contended by the appellee, we must say that we cannot
subscribe to it.
We know of no principle of law that would authorize the court to compel a corporation, which for a long period was not in
operation and did not receive any income, to pay the salaries of its officers during such period, even though they were
incapacitated and did not perform any service. To do so would be tantamount to depriving the corporation or its
stockholders of their property without due process of law.
The resolutions of the stockholders hereinabove quoted are invoked by the appellee to support the proposition that
Fitzsimmons, during his internment, performed certain acts as president of the corporation, which were ratified and
confirmed by the stockholders in their annual meeting on January 21, 1946. But those acts consisted merely of
borrowing money for himself and the other officers of the corporation and their respective families to enable them to eke
out an existence during their internment. The ratification of those acts by the stockholders had for its purpose to relieve
Fitzsimmons of personal liability for the obligations thus contracted by him in the name of the company. To say that by
thus ratifying those acts of Fitzsimmons the corporation became obligated to pay his salaries during his internment
aggregating P90,000, would be the height of absurdity.
We are clearly of the opinion that the estate of Fitzsimmons is not entitled to its counterclaim of P90,000 or any part
thereof.
Let judgment be entered modifying that of the trial court to read as follows:

RESOLVED, that in the death of R. T. Fitzsimmons, President of the Company from March, 1939, to the time
of his death, which occurred in the Santo Tomas Internment Camp, Manila, on June 27, 1944, the Company
suffered a distinct loss and his country a loyal American;
FURTHER, that his passing is keenly felt and mourned by those of the Company with whim he was
associated for more than thirty years, not only for the kindness, consideration and tolerance he showed to all
at all times;
BE IT FURTHER RESOLVED, that the Company convey its sympathies to the family and other immediate
relatives of the late Mr. Fitzsimmons, transmitting to them a copy of this resolution.
39 | P a g e

The appellant Atlantic, Gulf and Pacific Company of Manila is ordered to pay to the administrator the sum of
P64,500 upon the retransfer by the latter to the former of the 545 shares of stock purchased by the decedent
in 1939.
The administrator is ordered to pay to the said company the sum of P868.67.
The claim of the company against the estate for P63,000 and the counterclaim of the estate against the
company for P90,000 are disapproved. It is so ordered, without costs.

xxx xxx xxx

G.R. No. 74306 March 16, 1992
ENRIQUE RAZON, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and VICENTE B. CHUIDIAN, in his capacity as Administrator of the Estate
of the Deceased JUAN T. CHUIDIAN, respondents.
G.R. No. 74315 March 16, 1992
VICENTE B. CHUIDIAN, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, ENRIQUE RAZ0N, and E. RAZON, INC., respondents.

The evidence of the plaintiff shown that he is the administrator of the intestate estate of Juan
Telesforo Chuidian in Special Proceedings No. 71054, Court of First Instance of Manila.
Sometime in 1962, Enrique Razon organized the E. Razon, Inc. for the purpose of bidding for the
arrastre services in South Harbor, Manila. The incorporators consisted of Enrique Razon, Enrique
Valles, Luisa M. de Razon, Jose Tuason, Jr., Victor Lim, Jose F. Castro and Salvador Perez de
Tagle.
On April 23, 1966, stock certificate No. 003 for 1,500 shares of stock of defendant corporation was
issued in the name of Juan T. Chuidian.
On the basis of the 1,500 shares of stock, the late Juan T. Chuidian and after him, the plaintiffappellant, were elected as directors of E. Razon, Inc. Both of them actually served and were paid
compensation as directors of E. Razon, Inc.

GUTIERREZ, JR., J.:

The main issue in these consolidated petitions centers on the ownership of 1,500 shares of stock in E. Razon, Inc.
covered by Stock Certificate No. 003 issued on April 23, 1966 and registered under the name of Juan T. Chuidian in the
books of the corporation. The then Court of First Instance of Manila, now Regional Trial Court of Manila, declared that
Enrique Razon, the petitioner in G.R. No. 74306 is the owner of the said shares of stock. The then Intermediate
Appellate Court, now Court of Appeals, however, reversed the trial court's decision and ruled that Juan T. Chuidian, the
deceased father of petitioner Vicente B. Chuidian in G.R. No. 74315 is the owner of the shares of stock. Both parties
filed separate motions for reconsideration. Enrique Razon wanted the appellate court's decision reversed and the trial
court's decision affirmed while Vicente Chuidian asked that all cash and stock dividends and all the pre-emptive rights
accruing to the 1,500 shares of stock be ordered delivered to him. The appellate court denied both motions. Hence,
these petitions.
The relevant Antecedent facts are as follows:
In his complaint filed on June 29, 1971, and amended on November 16, 1971, Vicente B. Chuidian
prayed that defendants Enrique B. Razon, E. Razon, Inc., Geronimo Velasco, Francisco de Borja,
Jose Francisco, Alfredo B. de Leon, Jr., Gabriel Llamas and Luis M. de Razon be ordered to deliver
certificates of stocks representing the shareholdings of the deceased Juan T. Chuidian in the E.
Razon, Inc. with a prayer for an order to restrain the defendants from disposing of the said shares
of stock, for a writ of preliminary attachment v. properties of defendants having possession of
shares of stock and for receivership of the properties of defendant corporation . . .
xxx xxx xxx
In their answer filed on June 18, 1973, defendants alleged that all the shares of stock in the name
of stockholders of record of the corporation were fully paid for by defendant, Razon; that said
shares are subject to the agreement between defendants and incorporators; that the shares of
stock were actually owned and remained in the possession of Razon. Appellees also alleged . . .
that neither the late Juan T. Chuidian nor the appellant had paid any amount whatsoever for the
1,500 shares of stock in question . . .
40 | P a g e

From the time the certificate of stock was issued on April 1966 up to April 1971, Enrique Razon had
not questioned the ownership by Juan T. Chuidian of the shares of stock in question and had not
brought any action to have the certificate of stock over the said shares cancelled.
The certificate of stock was in the possession of defendant Razon who refused to deliver said
shares to the plaintiff, until the same was surrendered by defendant Razon and deposited in a
safety box in Philippine Bank of Commerce.
Defendants allege that after organizing the E. Razon, Inc., Enrique Razon distributed shares of
stock previously placed in the names of the withdrawing nominal incorporators to some friends
including Juan T. Chuidian
Stock Certificate No. 003 covering 1,500 shares of stock upon instruction of the late Chuidian on
April 23, 1986 was personally delivered by Chuidian on July 1, 1966 to the Corporate Secretary of
Attorney Silverio B. de Leon who was himself an associate of the Chuidian Law Office (Exhs. C &
11). Since then, Enrique Razon was in possession of said stock certificate even during the lifetime
of the late Chuidian, from the time the late Chuidian delivered the said stock certificate to
defendant Razon until the time (sic) of defendant Razon. By agreement of the parties (sic)
delivered it for deposit with the bank under the joint custody of the parties as confirmed by the trial
court in its order of August 7, 1971.
Thus, the 1,500 shares of stook under Stock Certificate No. 003 were delivered by the late
Chuidian to Enrique because it was the latter who paid for all the subscription on the shares of
stock in the defendant corporation and the understanding was that he (defendant Razon) was the
owner of the said shares of stock and was to have possession thereof until such time as he was
paid therefor by the other nominal incorporators/stockholders (TSN., pp. 4, 8, 10, 24-25, 25-26, 2831, 31-32, 60, 66-68, July 22, 1980, Exhs. "C", "11", "13" "14"). (Ro11o 74306, pp. 66-68)
In G.R. No. 74306, petitioner Enrique Razon assails the appellate court's decision on its alleged misapplication of the
dead man's statute rule under Section 20(a) Rule 130 of the Rules of Court. According to him, the "dead man's statute"
rule is not applicable to the instant case. Moreover, the private respondent, as plaintiff in the case did not object to his

oral testimony regarding the oral agreement between him and the deceased Juan T. Chuidian that the ownership of the
shares of stock was actually vested in the petitioner unless the deceased opted to pay the same; and that the petitioner
was subjected to a rigid cross examination regarding such testimony.
Section 20(a) Rule 130 of the Rules of Court (Section 23 of the Revised Rules on Evidence) States:
Sec. 20. Disqualification by reason of interest or relationship The following persons cannot
testify as to matters in which they are interested directly or indirectly, as herein enumerated.
(a) 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 accruing
before the death of such deceased person or before such person became of unsound mind."
(Emphasis supplied)
xxx xxx xxx
The purpose of the rule has been explained by this Court in this wise:
The reason for the rule is that if persons having a claim against the estate of the deceased or his
properties were allowed to testify as to the supposed statements made by him (deceased person),
many would be tempted to falsely impute statements to deceased persons as the latter can no
longer deny or refute them, thus unjustly subjecting their properties or rights to false or
unscrupulous claims or demands. The purpose of the law is to "guard against the temptation to
give false testimony in regard to the transaction in question on the part of the surviving party."
(Tongco v. Vianzon, 50 Phil. 698; Go Chi Gun, et al. v. Co Cho, et al., 622 [1955])
The rule, however, delimits the prohibition it contemplates in that it is applicable to a case against the administrator or its
representative of an estate upon a claim against the estate of the deceased person. (See Tongco v. Vianzon, 50 Phil.
698 [1927])
In the instant case, the testimony excluded by the appellate court is that of the defendant (petitioner herein) to the affect
that the late Juan Chuidian, (the father of private respondent Vicente Chuidian, the administrator of the estate of Juan
Chuidian) and the defendant agreed in the lifetime of Juan Chuidian that the 1,500 shares of stock in E. Razon, Inc. are
actually owned by the defendant unless the deceased Juan Chuidian opted to pay the same which never happened.
The case was filed by the administrator of the estate of the late Juan Chuidian to recover shares of stock in E. Razon,
Inc. allegedly owned by the late Juan T. Chuidian.
It is clear, therefore, that the testimony of the petitioner is not within the prohibition of the rule. The case was not
filed against the administrator of the estate, nor was it filed upon claims against the estate.
Furthermore, the records show that the private respondent never objected to the testimony of the petitioner as regards
the true nature of his transaction with the late elder Chuidian. The petitioner's testimony was subject to crossexamination by the private respondent's counsel. Hence, granting that the petitioner's testimony is within the prohibition
of Section 20(a), Rule 130 of the Rules of Court, the private respondent is deemed to have waived the rule. We ruled in
the case of Cruz v. Court of Appeals (192 SCRA 209 [1990]):
41 | P a g e

It is also settled that the court cannot disregard evidence which would ordinarily be incompetent
under the rules but has been rendered admissible by the failure of a party to object thereto. Thus:
. . . The acceptance of an incompetent witness to testify in a civil suit, as well as the allowance of
improper questions that may be put to him while on the stand is a matter resting in the discretion of
the litigant. He may assert his right by timely objection or he may waive it, expressly or by silence.
In any case the option rests with him. Once admitted, the testimony is in the case for what it is
worth and the judge has no power to disregard it for the sole reason that it could have been
excluded, if it had been objected to, nor to strike it out on its own motion (Emphasis supplied).
(Marella v. Reyes, 12 Phil. 1.)
The issue as to whether or not the petitioner's testimony is admissible having been settled, we now proceed to discuss
the fundamental issue on the ownership of the 1,500 shares of stock in E. Razon, Inc.
E. Razon, Inc. was organized in 1962 by petitioner Enrique Razon for the purpose of participating in the bidding for the
arrastre services in South Harbor, Manila. The incorporators were Enrique Razon, Enrique Valles, Luisa M. de Razon,
Jose Tuazon, Jr., Victor L. Lim, Jose F. Castro and Salvador Perez de Tagle. The business, however, did not start
operations until 1966. According to the petitioner, some of the incorporators withdrew from the said corporation. The
petitioner then distributed the stocks previously placed in the names of the withdrawing nominal incorporators to some
friends, among them the late Juan T. Chuidian to whom he gave 1,500 shares of stock. The shares of stock were
registered in the name of Chuidian only as nominal stockholder and with the agreement that the said shares of stock
were owned and held by the petitioner but Chuidian was given the option to buy the same. In view of this arrangement,
Chuidian in 1966 delivered to the petitioner the stock certificate covering the 1,500 shares of stock of E. Razon, Inc.
Since then, the Petitioner had in his possession the certificate of stock until the time, he delivered it for deposit with the
Philippine Bank of Commerce under the parties' joint custody pursuant to their agreement as embodied in the trial
court's order.
The petitioner maintains that his aforesaid oral testimony as regards the true nature of his agreement with the late Juan
Chuidian on the 1,500 shares of stock of E. Razon, Inc. is sufficient to prove his ownership over the said 1,500 shares
of stock.
The petitioner's contention is not correct.
In the case of Embassy Farms, Inc. v. Court of Appeals (188 SCRA 492 [1990]) we ruled:
. . . For an effective, transfer of shares of stock the mode and manner of transfer as prescribed by
law must be followed (Navea v. Peers Marketing Corp., 74 SCRA 65). As provided under Section 3
of Batas Pambansa Bilang, 68 otherwise known as the Corporation Code of the Philippines, shares
of stock may be transferred by delivery to the transferee of the certificate properly indorsed. Title
may be vested in the transferee by the delivery of the duly indorsed certificate of stock (18 C.J.S.
928, cited in Rivera v. Florendo, 144 SCRA 643). However, no transfer shall be valid, except as
between the parties until the transfer is properly recorded in the books of the corporation (Sec. 63,
Corporation Code of the Philippines; Section 35 of the Corporation Law)
In the instant case, there is no dispute that the questioned 1,500 shares of stock of E. Razon, Inc. are in the name of the
late Juan Chuidian in the books of the corporation. Moreover, the records show that during his lifetime Chuidian was
ellected member of the Board of Directors of the corporation which clearly shows that he was a stockholder of the
corporation. (See Section 30, Corporation Code) From the point of view of the corporation, therefore, Chuidian was the

owner of the 1,500 shares of stock. In such a case, the petitioner who claims ownership over the questioned shares of
stock must show that the same were transferred to him by proving that all the requirements for the effective transfer of
shares of stock in accordance with the corporation's by laws, if any, were followed (See Nava v. Peers Marketing
Corporation, 74 SCRA 65 [1976]) or in accordance with the provisions of law.
The petitioner failed in both instances. The petitioner did not present any by-laws which could show that the 1,500
shares of stock were effectively transferred to him. In the absence of the corporation's by-laws or rules governing
effective transfer of shares of stock, the provisions of the Corporation Law are made applicable to the instant case.
The law is clear that in order for a transfer of stock certificate to be effective, the certificate must be
properlyindorsed and that title to such certificate of stock is vested in the transferee by the delivery of the duly
indorsedcertificate of stock. (Section 35, Corporation Code) Since the certificate of stock covering the questioned 1,500
shares of stock registered in the name of the late Juan Chuidian was never indorsed to the petitioner, the inevitable
conclusion is that the questioned shares of stock belong to Chuidian. The petitioner's asseveration that he did not
require an indorsement of the certificate of stock in view of his intimate friendship with the late Juan Chuidian can not
overcome the failure to follow the procedure required by law or the proper conduct of business even among friends. To
reiterate, indorsement of the certificate of stock is a mandatory requirement of law for an effective transfer of a certificate
of stock.
Moreover, the preponderance of evidence supports the appellate court's factual findings that the shares of stock were
given to Juan T. Chuidian for value. Juan T. Chuidian was the legal counsel who handled the legal affairs of the
corporation. We give credence to the testimony of the private respondent that the shares of stock were given to Juan T.
Chuidian in payment of his legal services to the corporation. Petitioner Razon failed to overcome this testimony.
In G.R. No. 74315, petitioner Vicente B. Chuidian insists that the appellate court's decision declaring his deceased
father Juan T. Chuidian as owner of the 1,500 shares of stock of E. Razon, Inc. should have included all cash and stock
dividends and all the pre-emptive rights accruing to the said 1,500 shares of stock.
The petition is impressed with merit.
The cash and stock dividends and all the pre-emptive rights are all incidents of stock ownership.
The rights of stockholders are generally enumerated as follows:
xxx xxx xxx
. . . [F]irst, to have a certificate or other evidence of his status as stockholder issued to him;
second, to vote at meetings of the corporation; third, to receive his proportionate share of the
profits of the corporation; and lastly, to participate proportionately in the distribution of the corporate
assets upon the dissolution or winding up. (Purdy's Beach on Private Corporations, sec. 554)
(Pascual v. Del Saz Orozco, 19 Phil. 82, 87)
WHEREFORE, judgment is rendered as follows:
a) In G.R. No. 74306, the petition is DISMISSED. The questioned decision and resolution of the then Intermediate
Appellate Court, now the Court of Appeals, are AFFIRMED. Costs against the petitioner.
42 | P a g e

b) In G.R. No. 74315, the petition is GRANTED. The questioned Resolution insofar as it denied the petitioner's motion to
clarify the dispositive portion of the decision of the then Intermediate Appellate Court, now Court of Appeals is
REVERSED and SET ASIDE. The decision of the appellate court is MODIFIED in that all cash and stock dividends as,
well as all pre-emptive rights that have accrued and attached to the 1,500 shares in E. Razon, Inc., since 1966 are
declared to belong to the estate of Juan T. Chuidian. SO ORDERED.

G.R. No. L-22948

March 17, 1925

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.
FAUSTO V. CARLOS, defendant-appellant.
M.H. de Joya, Jose Padilla, Vicente Sotto and Monico Mercado for appellant.
Attorney-General Villa-Real and City Fiscal Guevara for appellee.
OSTRAND, J.:
This is an appeal from a decision of the Court of First Instance of the City of Manila finding the defendant Fausto V.
Carlos guilty of the crime of murder and sentencing him to suffer life imprisonment, with the accessory penalties
prescribed by law and with the costs.
It appears from the evidence that the victim of the alleged murder, Dr. Pablo G. Sityar, on March 3, 1924, in Mary Chiles
Hospital, performed a surgical operation upon the defendant's wife for appendicitis and certain other ailments. She
remained in the hospital until the 18th of the same month, but after her release therefrom she was required to go
several times to the clinic of Doctor Sityar at No. 40 Escolta, for the purpose of dressing the wounds caused by the
operation. On these occasions she was accompanied by her husband, the defendant. The defendant states that on one
of the visits, that of March 20, 1924, Doctor Sityar sent him out on an errand to buy some medicine, and that while
defendant was absent on this errand Doctor Sityar outraged the wife. The defendant further states that his wife informed
him of the outrage shortly after leaving the clinic. Notwithstanding this it nevertheless appears that he again went there
on March 28th to consult the deceased about some lung trouble from which he, the defendant, was suffering.. He was
given some medical treatment and appears to have made at least one more visit to the clinic without revealing any
special resentment.
On May 12, 1924, the defendant, suffering from some stomach trouble, entered the Philippine General Hospital where
he remained until May 18, 1924, and where he was under the care of two other physicians. While in the hospital her
received a letter (Exhibit 5) from Doctor Sityar asking the immediate settlement of the account for the professional
services rendered his wife. Shortly after his release from the hospital the defendant sought an interview with Doctor
Sityar and went to the latter's office several times without finding him in. On one of these occasions he was asked by an
employee of the office, the nurse Cabaera, if he had come to settle his account, to which the defendant answered that
he did not believe he owed the doctor anything.
In the afternoon of May 26th the defendant again went to the office of the deceased and found him there alone.
According to the evidence of the prosecution, the defendant then, without any preliminary quarrel between the two,
attacked the deceased with a fan-knife and stabbed him twice. The deceased made an effort to escape but the
defendant pursued him and overtaking him in the hall outside the office, inflicted another wound upon him and as a
consequence if the three wounds he died within a few minutes. The defendants made his escape but surrendered
himself to the Constabulary at Malolos, Bulacan, in the evening of the following day.
The defendant admits that he killed the deceased but maintains that he did so in self-defense. He explains that he went
to Doctor Sityar's office to protest against the amount of the fee charged by the doctor and, in any event, to ask for an
extension of the time of payment; that during the conversation upon that subject the deceased insulted him by telling
him that inasmuch as he could not pay the amount demanded he could send his wife to the office as she was the one
treated, and that she could then talk the matter over with the decease; that this statement was made in such an insolent
43 | P a g e

and contemptuous manner that the defendant became greatly incensed and remembering the outrage committed upon
his wife, he assumed a threatening attitude and challenged the deceased to go downstairs with him and there settle the
matter; that the deceased thereupon took a pocket-knife from the center drawer of his desk and attacked the defendant,
endeavoring to force him out of the office; that the defendant, making use of his knowledge of fencing, succeeded in
taking the knife away from the deceased and blinded by fury stabbed him first in the right side of the breast and then in
the epigastric region, and fearing that the deceased might secure some other weapon or receive assistance from the
people in the adjoining room, he again stabbed him, this time in the back.
The defendant's testimony as to the struggle described is in conflict with the evidence presented by the prosecution. But
assuming that it is true, it is very evident that it fails to establish a case of self-defense and that, in reality, the only
question here to be determined is whether the defendant is guilty of murder or of simple homicide.
The court below found that the crime was committed with premeditation and therefore constituted murder. This finding
can only be sustained by taking into consideration Exhibit L, a letter written to the defendant by his wife and siezed by
the police in searching his effects on the day of his arrest. It is dated May 25, 1924, two days before the commission of
the crime and shows that the writer feared that the defendant contemplated resorting to physical violence in dealing with
the deceased.
Counsel for the defendant argues vigorously that the letter was a privileged communication and therefore not admissible
in evidence. The numerical weight of authority is, however, to the effect that where a privileged communication from one
spouse to another comes into the hands of a third party, whether legally or not, without collusion and voluntary
disclosure on the part of either of the spouses, the privilege is thereby extinguished and the communication, if otherwise
competent, becomes admissible. (28 R.C.L., 530 and authorities there cited.) Such is the view of the majority of this
court.
Professor Wigmore states the rule as follows:
For documents of communication coming into the possession of a third person, a distinction should obtain,
analogous to that already indicated for a client's communications (ante, par. 2325, 2326); i. e., if they were
obtained from the addressee by voluntary delivery, they should still be privileged (for otherwise the privilege
could by collusion be practically nullified for written communications); but if they were obtained surreptitiously
or otherwise without the addressee's consent, the privilege should cease. (5 Wigmore on Evidence, 2nd ed.,
par. 2339.)
The letter in question was obtained through a search for which no warrant appears to have been issued and counsel for
the defendant cites the causes of Boyd and Boyd vs. United States (116 U.S., 616) and Silverthorne Lumber Co. and
Silverthorne vs. United States (251 U.S., 385) as authority for the proposition that documents obtained by illegal
searches of the defendant's effects are not admissible in evidence in a criminal case. In discussing this point we can do
not better than to quote Professor Wigmore:
The foregoing doctrine (i. e., that the admissibility of evidence is not affected by the illegality of the means
through which the party has been enabled to obtain the evidence) was never doubted until the appearance of
the ill-starred majority opinion of Boyd vs. United States, in 1885, which has exercised unhealthy influence
upon subsequent judicial opinion in many States.
xxx

xxx

xxx

The progress of this doctrine of Boyd vs. United States was as follows: (a) The Boyd Case remained
unquestioned in its own Court for twenty years; meantime receiving frequent disfavor in the State Courts
(ante, par. 2183). (b) Then in Adams vs. New York, in 1904, it was virtually repudiated in the Federal Supreme
Court, and the orthodox precedents recorded in the State courts (ante, par. 2183) were expressly approved.
(c) Next, after another twenty years, in 1914 moved this time, not by erroneous history, but by misplaced
sentimentality the Federal Supreme Court, in Weeks vs. United States, reverted to the original doctrine of
the Boyd Case, but with a condition, viz., that the illegality of the search and seizure should first have been
directly litigated and established by a motion, made before trial, for the return of the things seized; so that,
after such a motion, and then only, the illegality would be noticed in the main trial and the evidence thus
obtained would be excluded. ... (4 Wigmore on Evidence, 2nd ed., par. 2184.)
In the Silverthorne Lumber Co. case the United States Supreme Court adhered to its decision in the Weeks Case. The
doctrine laid down in these cases has been followed by some of the State courts but has been severely criticized and
does not appear to have been generally accepted. But assuming, without deciding, that it prevails in this jurisdiction it is,
nevertheless, under the decisions in the Weeks and Silverthorne cases, inapplicable to the present case. Here the
illegality of the search and seizure was not "directly litigated and established by a motion, made before trial, for the
return of the things seized."
The letter Exhibit L must, however, be excluded for reasons not discussed in the briefs. The letter was written by the
wife of the defendant and if she had testified at the trial the letter might have been admissible to impeach her testimony,
but she was not put on the witness-stand and the letter was therefore not offered for that purpose. If the defendant
either by answer or otherwise had indicated his assent to the statements contained in the letter it might also have been
admissible, but such is not the case here; the fact that he had the letter in his possession is no indication of
acquiescence or assent on his part. The letter is therefore nothing but pure hearsay and its admission in evidence
violates the constitutional right of the defendant in a criminal case to be confronted with the witnesses for the
prosecution and have the opportunity to cross-examine them. In this respect there can be no difference between an
ordinary communication and one originally privileged.
The question is radically different from that of the admissibility of testimony of a third party as to a conversation between
a husband and wife overheard by the witness. Testimony of that character is admissible on the ground that it relates to a
conversation in which both spouses took part and on the further ground that where the defendant has the opportunity to
answer a statement made to him by his spouse and fails to do so, his silence implies assent. That cannot apply where
the statement is contained in an unanswered letter.
The Attorney-General in support of the contrary view quotes Wigmore, as follows:
. . . Express communication is always a proper mode of evidencing knowledge or belief. Communication to
ahusband or wife is always receivable to show probable knowledge by the other (except where they are living
apart or are not in good terms), because, while it is not certain that the one will tell the other, and while the
probability is less upon some subjects than upon others, still there is always some probability, which is all
that can be fairly asked for admissibility. ... (1 Wigmore, id., par. 261.)
This may possibly be good law, though Wigmore cites no authority in support of his assertion, but as far as we can see
it has little or nothing to do with the present case.
As we have already intimated, if Exhibit L is excluded, there is in our opinion not sufficient evidence in the record to
show that the crime was premeditated.

44 | P a g e

The prosecution maintains that the crime was committed with alevosia. This contention is based principally on the fact
that one of the wounds received by the deceased showed a downward direction indicating that the deceased was sitting
down when the wound was inflicted. We do not think this fact is sufficient proof. The direction of the wound would
depend largely upon the manner in which the knife was held.
For the reasons stated we find the defendant guilty of simple homicide, without aggravating or extenuating
circumstances.
The sentence appealed from is therefore modified by reducing the penalty to fourteen years, eight months and one day
of reclusion temporal, with the corresponding accessory penalties and with the costs against the appellant. So ordered.

G.R. No. L-9231

January 6, 1915

UY CHICO, plaintiff-appellant,
vs.
THE UNION LIFE ASSURANCE SOCIETY, LIMITED, ET AL., defendants-appellees.
Beaumont and Tenney for appellant.
Bruce, Lawrence, Ross and Block for appellees.
TRENT, J.:
An appeal from a judgment dismissing the complaint upon the merits, with costs.
The plaintiff seeks to recover the face value of two insurance policies upon a stock of dry goods destroyed by fire. It
appears that the father of the plaintiff died in 1897, at which time he was conducting a business under his own name, Uy
Layco. The plaintiff and his brother took over the business and continued it under the same name, "Uy Layco."
Sometime before the date of the fire, the plaintiff purchased his brother's interest in the business and continued to carry
on the business under the father's name. At the time of the fire "Uy Layco" was heavily indebted and subsequent thereto
the creditors of the estate of the plaintiff's father. During the course of these proceedings, the plaintiff's attorney
surrendered the policies of insurance to the administrator of the estate, who compromised with the insurance company
for one-half their face value, or P6,000. This money was paid into court and is now being held by the sheriff. The plaintiff
now brings this action, maintaining that the policies and goods insured belonged to him and not to the estate of his
deceased father and alleges that he is not bound by the compromise effected by the administrator of his father's estate.
The defendant insurance company sought to show that the plaintiff had agreed to compromise settlement of the
policies, and for that purpose introduced evidence showing that the plaintiff's attorney had surrendered the policies to
the administrator with the understanding that such a compromise was to be effected. The plaintiff was asked, while on
the witness stand, if he had any objection to his attorney's testifying concerning the surrender of the policies, to which
he replied in the negative. The attorney was then called for that purpose. Whereupon, counsel for the plaintiff formally
withdrew the waiver previously given by the plaintiff and objected to the testimony of the attorney on the ground that it
was privileged. Counsel, on this appeal, base their argument of the proposition that a waiver of the client's privilege may
be withdrawn at any time before acted upon, and cite in support thereof Ross vs. Great Northern Ry. Co., (101 Minn.,
122; 111 N. W., 951). The case of Natlee Draft Horse Co. vs. Cripe and Co. (142 Ky., 810), also appears to sustain their
contention. But a preliminary question suggest itself, Was the testimony in question privileged?
Our practice Act provides: "A lawyer must strictly maintain inviolate the confidence and preserve the secrets of his client.
He shall not be permitted in any court, without the consent of his client, given in open court, to testify to any facts
imparted to him by his client in professional consultation, or for the purpose of obtaining advice upon legal matters."
(Sec. 31, Act No. 190.)
A similar provision is inserted in section 383, No. 4, of the same Act. It will be noted that the evidence in question
concerned the dealings of the plaintiff's attorney with a third person. Of the very essence of the veil of secrecy which
surrounds communications made between attorney and client, is that such communications are not intended for the
information of third persons or to be acted upon by them, put of the purpose of advising the client as to his rights. It is
evident that a communication made by a client to his attorney for the express purpose of its being communicated to a
third person is essentially inconsistent with the confidential relation. When the attorney has faithfully carried out his
instructions be delivering the communication to the third person for whom it was intended and the latter acts upon it, it
45 | P a g e

cannot, by any reasoning whatever, be classified in a legal sense as a privileged communication between the attorney
and his client. It is plain that such a communication, after reaching the party for whom it was intended at least, is a
communication between the client and a third person, and that the attorney simply occupies the role of intermediary or
agent. We quote from but one case among the many which may be found upon the point:
The proposition advanced by the respondent and adopted by the trial court, that one, after fully authorizing
his attorney, as his agent, to enter into contract with a third party, and after such authority has been executed
and relied on, may effectively nullify his own and his duly authorized agent's act by closing the attorney's
mouth as to the giving of such authority, is most startling. A perilous facility of fraud and wrong, both upon the
attorney and the third party, would result. The attorney who, on his client's authority, contracts in his behalf,
pledges his reputation and integrity that he binds his client. The third party may well rely on the assurance of
a reputable lawyer that he has authority in fact, though such assurance be given only by implication from the
doing of the act itself. It is with gratification, therefore, that we find overwhelming weight of authority, against
the position assumed by the court below, both in states where the privilege protecting communications with
attorneys is still regulated by the common law and in those where it is controlled by statute, as in Wisconsin.
(Koeber vs. Sommers, 108 Wis., 497; 52 L. R. A., 512.)
Other cases wherein the objection to such evidence on the ground of privilege has been overruled are: Henderson vs.
Terry (62 Tex., 281); Shove vs. Martin (85 Minn., 29); In re Elliott (73 Kan., 151); Collins vs. Hoffman (62 Wash., 278);
Gerhardt vs. Tucker (187 Mo., 46). These cases cover a variety of communications made by an authority in behalf of his
client to third persons. And cases wherein evidence of the attorney as to compromises entered into by him on behalf of
his client were allowed to be proved by the attorney's testimony are not wanting. (Williams vs. Blumenthal, 27 Wash.,
24; Koeber vs. Sommers, supra.)
It is manifest that the objection to the testimony of the plaintiff's attorney as to his authority to compromise was properly
overruled. The testimony was to the effect that when the attorney delivered the policies to the administrator, he
understood that there was a compromise to be effected, and that when he informed the plaintiff of the surrender of the
policies for that purpose the plaintiff made no objection whatever. The evidence is sufficient to show that the plaintiff
acquiesced in the compromise settlement of the policies. Having agreed to the compromise, he cannot now disavow it
and maintain an action for the recovery of their face value.
For the foregoing reasons the judgment appealed from is affirmed, with costs. So ordered.

G.R. No. 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.

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. 3Respondent 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 approximately3,744 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.

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
46 | P a g e

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 andidentity 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.
47 | P a g e

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.

This is what appears to be the cause for which they have been impleaded by the PCGG 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:

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 partydefendant because he "(Roco) has not filed an Answer. PCGG had therefore the right to dismiss Civil Case No.0033 as
to Roco 'without an order of court by filing a notice of dismissal'," 14 and he has undertaken to identify his principal. 15
Petitioners' contentions are impressed with merit.
I
It is quite apparent that petitioners were impleaded by the PCGG as co-defendants to force them to disclose the identity
of their clients. Clearly, respondent PCGG is not after petitioners but the "bigger fish" as they say in street parlance. This
ploy is quite clear from the 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:
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.
48 | P a g e

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 23based 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.
49 | P a g e

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

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.

Notwithstanding these considerations, the general rule is however qualified by some important exceptions.

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:

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.

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

35

U .S. v. Hodge and Zweig, 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

50 | P a g e

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 attorneyclient 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

51 | P a g e

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
Proceedings 51 andTillotson 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.
55

To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and Shipley P.A. v. Scheller requiring strict
obligation of lawyers vis-a-vis clients. In this case, a contingent fee lawyer was fired shortly before the end of completion
of his work, and sought payment quantum meruit of work done. The court, however, found that the lawyer was fired for
cause after he sought to pressure his client into signing a new fee agreement while settlement negotiations were at a
critical stage. While the client found a new lawyer during the interregnum, events forced the client to settle for less than
what was originally offered. Reiterating the principle of fiduciary duty of lawyers to clients in Meinhard
v. Salmon 56famously 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.
52 | P a g e

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." 60Being
"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
53 | P a g e

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.

G.R. No. L-21237

DEAR SIR: You are hereby given the sole and exclusive sales agency for our bituminous limestone and other asphalt
products of the Leyte Asphalt and Mineral Oil Company, Ltd., May first, 1922, in the following territory:

March 22, 1924

JAMES D. BARTON, plaintiff-appellee,

vs.
LEYTE ASPHALT & MINERAL OIL CO., LTD., defendant-appellant.
Block, Johnston & Greenbaum and Ross, Lawrence & Selph for appellant.
Frank B. Ingersoll for appellee.

This action was instituted in the Court of First Instance of the City of Manila by James D. Barton, to recover of the Leyte
Asphalt & Mineral Oil Co., Ltd., as damages for breach of contract, the sum of $318,563.30, United States currency, and
further to secure a judicial pronouncement to the effect that the plaintiff is entitled to an extension of the terms of the
sales agencies specified in the contract Exhibit A. The defendant answered with a general denial, and the cause was
heard upon the proof, both documentary and oral, after which the trial judge entered a judgment absolving the
defendant corporation from four of the six causes of action set forth in the complaint and giving judgment for the plaintiff
to recover of said defendant, upon the first and fourth causes of action, the sum of $202,500, United States currency,
equivalent to $405,000, Philippine currency, with legal interest from June 2, 1921, and with costs. From this judgment
the defendant company appealed.
The plaintiff is a citizen of the United States, resident in the City of Manila, while the defendant is a corporation
organized under the law of the Philippine Islands with its principal office in the City of Cebu, Province of Cebu,
Philippine Islands. Said company appears to be the owner by a valuable deposit of bituminous limestone and other
asphalt products, located on the Island of Leyte and known as the Lucio mine. On April 21, 1920, one William Anderson,
as president and general manager of the defendant company, addressed a letter Exhibit B, to the plaintiff Barton,
authorizing the latter to sell the products of the Lucio mine in the Commonwealth of Australia and New Zealand upon a
scale of prices indicated in said letter.
In the third cause of action stated in the complaint the plaintiff alleges that during the life of the agency indicated in
Exhibit B, he rendered services to the defendant company in the way of advertising and demonstrating the products of
the defendant and expended large sums of money in visiting various parts of the world for the purpose of carrying on
said advertising and demonstrations, in shipping to various parts of the world samples of the products of the defendant,
and in otherwise carrying on advertising work. For these services and expenditures the plaintiff sought, in said third
cause of action, to recover the sum of $16,563.80, United States currency. The court, however, absolved the defendant
from all liability on this cause of action and the plaintiff did not appeal, with the result that we are not now concerned
with this phase of the case. Besides, the authority contained in said Exhibit B was admittedly superseded by the
authority expressed in a later letter, Exhibit A, dated October 1, 1920. This document bears the approval of the board of
directors of the defendant company and was formally accepted by the plaintiff. As it supplies the principal basis of the
action, it will be quoted in its entirety.
(Exhibit A)
CEBU, CEBU, P. I.
October 1, 1920.

54 | P a g e

Saigon

Java

New Zealand

India

China

Tasmania

Sumatra

Hongkong

Siam and the Straits Settlements, also in the United States of America until May 1, 1921.

STREET, J.:

JAMES D. BARTON, Esq.,

Cebu Hotel City.

Australia

As regard bituminous limestone mined from the Lucio property. No orders for less than one thousand (1,000) tons will
be accepted except under special agreement with us. All orders for said products are to be billed to you as follows:
Per ton
In 1,000 ton lots ........................................... P15
In 2,000 ton lots ........................................... 14
In 5,000 ton lots ........................................... 12
In 10,000 ton lots .......................................... 10
with the understanding, however that, should the sales in the above territory equal or exceed ten thousand (10,000)
tons in the year ending October 1, 1921, then in that event the price of all shipments made during the above period shall
be ten pesos (P10) per ton, and any sum charged to any of your customers or buyers in the aforesaid territory in excess
of ten pesos (P10) per ton, shall be rebated to you. Said rebate to be due and payable when the gross sales have
equalled or exceeded ten thousand (10,000) tons in the twelve months period as hereinbefore described. Rebates on
lesser sales to apply as per above price list.
You are to have full authority to sell said product of the Lucio mine for any sum see fit in excess of the prices quoted
above and such excess in price shall be your extra and additional profit and commission. Should we make any
collection in excess of the prices quoted, we agree to remit same to your within ten (10) days of the date of such
collections or payments.
All contracts taken with municipal governments will be subject to inspector before shipping, by any authorized
representative of such governments at whatever price may be contracted for by you and we agree to accept such
contracts subject to draft attached to bill of lading in full payment of such shipment.
It is understood that the purchasers of the products of the Lucio mine are to pay freight from the mine carriers to
destination and are to be responsible for all freight, insurance and other charges, providing said shipment has been
accepted by their inspectors.
All contracts taken with responsible firms are to be under the same conditions as with municipal governments.
All contracts will be subject to delays caused by the acts of God, over which the parties hereto have no control.
It is understood and agreed that we agree to load all ships, steamers, boats or other carriers prompty and without delay
and load not less than 1,000 tons each twenty-four hours after March 1, 1921, unless we so notify you specifically prior

to that date we are prepared to load at that rate, and it is also stipulated that we shall not be required to ship orders of
5,000 tons except on 30 days notice and 10,000 tons except on 60 days notice.
If your sales in the United States reach five thousand tons on or before May 1, 1921, you are to have sole rights for this
territory also for one year additional and should your sales in the second year reach or exceed ten thousand tons you
are to have the option to renew the agreement for this territory on the same terms for an additional two years.
Should your sales equal exceed ten thousand (10,000) tons in the year ending October 1, 1921, or twenty thousand
(20,000) tons by May 1, 1922, then this contract is to be continued automatically for an additional three years ending
April 30, 1925, under the same terms and conditions as above stipulated.
The products of the other mines can be sold by you in the aforesaid territories under the same terms and conditions as
the products of the Lucio mine; scale of prices to be mutually agreed upon between us.
LEYTE ASPHALT & MINERAL OIL CO., LTD.
By (Sgd.) WM. ANDERSON
President
(Sgd.) W. C. A. PALMER
Secretary
Approved by Board of Directors,
October 1, 1920.
(Sgd.) WM. ANDERSON
President
Accepted.
(Sgd.) JAMES D. BARTON
Witness D. G. MCVEAN
Upon careful perusal of the fourth paragraph from the end of this letter it is apparent that some negative word has been
inadvertently omitted before "prepared," so that the full expression should be "unless we should notify you specifically
prior to that date that we are unprepared to load at that rate," or "not prepared to load at that rate."
Very soon after the aforesaid contract became effective, the plaintiff requested the defendant company to give him a
similar selling agency for Japan. To this request the defendant company, through its president, Wm. Anderson, replied,
under date of November 27, 1920, as follows:
In re your request for Japanese agency, will say, that we are willing to give you, the same commission on all
sales made by you in Japan, on the same basis as your Australian sales, but we do not feel like giving you a
regular agency for Japan until you can make some large sized sales there, because some other people have
given us assurances that they can handle our Japanese sales, therefore we have decided to leave this
agency open for a time.
Meanwhile the plaintiff had embarked for San Francisco and upon arriving at that port he entered into an agreement
with Ludvigsen & McCurdy, of that city, whereby said firm was constituted a subagent and given the sole selling rights
for the bituminous limestone products of the defendant company for the period of one year from November 11, 1920, on
55 | P a g e

terms stated in the letter Exhibit K. The territory assigned to Ludvigsen & McCurdy included San Francisco and all
territory in California north of said city. Upon an earlier voyage during the same year to Australia, the plaintiff had already
made an agreement with Frank B. Smith, of Sydney, whereby the latter was to act as the plaintiff's sales agent for
bituminous limestone mined at the defendant's quarry in Leyte, until February 12, 1921. Later the same agreement was
extended for the period of one year from January 1, 1921. (Exhibit Q.)
On February 5, 1921, Ludvigsen & McCurdy, of San Francisco, addressed a letter to the plaintiff, then in San Francisco,
advising hi that he might enter an order for six thousand tons of bituminous limestone to be loaded at Leyte not later
than May 5, 1921, upon terms stated in the letter Exhibit G. Upon this letter the plaintiff immediately indorsed his
acceptance.
The plaintiff then returned to Manila; and on March 2, 1921, Anderson wrote to him from Cebu, to the effect that the
company was behind with construction and was not then able to handle big contracts. (Exhibit FF.) On March 12,
Anderson was in Manila and the two had an interview in the Manila Hotel, in the course of which the plaintiff informed
Anderson of the San Francisco order. Anderson thereupon said that, owing to lack of capital, adequate facilities had not
been provided by the company for filling large orders and suggested that the plaintiff had better hold up in the matter of
taking orders. The plaintiff expressed surprise at this and told Anderson that he had not only the San Francisco order
(which he says he exhibited to Anderson) but other orders for large quantities of bituminous limestone to be shipped to
Australia and Shanghai. In another interview on the same Anderson definitely informed the plaintiff that the contracts
which be claimed to have procured would not be filled.
Three days later the plaintiff addressed a letter (Exhibit Y) to the defendant company in Cebu, in which he notified the
company to be prepared to ship five thousand tons of bituminous limestone to John Chapman Co., San Francisco,
loading to commence on May 1, and to proceed at the rate of one thousand tons per day of each twenty-four hours,
weather permitting.
On March 5, 1921, Frank B. Smith, of Sydney, had cabled the plaintiff an order for five thousand tons of bituminous
limestone; and in his letter of March 15 to the defendant, the plaintiff advised the defendant company to be prepared to
ship another five thousand tons of bituminous limestone, on or about May 6, 1921, in addition to the intended
consignment for San Francisco. The name Henry E. White was indicated as the name of the person through whom this
contract had been made, and it was stated that the consignee would be named later, no destination for the shipment
being given. The plaintiff explains that the name White, as used in this letter, was based on an inference which he had
erroneously drawn from the cable sent by Frank B. Smith, and his intention was to have the second shipment consigned
to Australia in response to Smith's order.
It will be noted in connection with this letter of the plaintiff, of March 15, 1921, that no mention was made of the names
of the person, or firm, for whom the shipments were really intended. The obvious explanation that occurs in connection
with this is that the plaintiff did not then care to reveal the fact that the two orders had originated from his own subagents
in San Francisco and Sydney.
To the plaintiff's letter of March 15, the assistant manager of the defendant company replied on March, 25, 1921,
acknowledging the receipt of an order for five thousand tons of bituminous limestone to be consigned to John Chapman
Co., of San Francisco, and the further amount of five thousand tons of the same material to be consigned to Henry E.
White, and it was stated that "no orders can be entertained unless cash has been actually deposited with either the
International Banking Corporation or the Chartered Bank of India, Australia and China, Cebu." (Exhibit Z.)
To this letter the plaintiff in turn replied from Manila, under date of March, 1921, questioning the right of the defendant to
insist upon a cash deposit in Cebu prior to the filling of the orders. In conclusion the plaintiff gave orders for shipment to
Australia of five thousand tons, or more, about May 22, 1921, and ten thousand tons, or more, about June 1, 1921. In

conclusion the plaintiff said "I have arranged for deposits to be made on these additional shipments if you will signify
your ability to fulfill these orders on the dates mentioned." No name was mentioned as the purchaser, or purchases, of
these intended Australian consignments.
Soon after writing the letter last above-mentioned, the plaintiff embarked for China and Japan. With his activities in
China we are not here concerned, but we note that in Tokio, Japan, he came in contact with one H. Hiwatari, who
appears to have been a suitable person for handling bituminous limestone for construction work in Japan. In the letter
Exhibit X, Hiwatari speaks of himself as if he had been appointed exclusive sales agent for the plaintiff in Japan, but no
document expressly appointing him such is in evidence.
While the plaintiff was in Tokio he procured the letter Exhibit W, addressed to himself, to be signed by Hiwatari. This
letter, endited by the plaintiff himself, contains an order for one thousand tons of bituminous limestone from the quarries
of the defendant company, to be delivered as soon after July 1, 1921, as possible. In this letter Hiwatari states, "on
receipt of the cable from you, notifying me of date you will be ready to ship, and also tonnage rate, I will agree to
transfer through the Bank of Taiwan, of Tokio, to the Asia Banking Corporation, of Manila, P. I., the entire payment of
$16,000 gold, to be subject to our order on delivery of documents covering bill of lading of shipments, the customs
report of weight, and prepaid export tax receipt. I will arrange in advance a confirmed or irrevocable letter of credit for
the above amounts so that payment can be ordered by cable, in reply to your cable advising shipping date."
In a letter, Exhibit X, of May 16, 1921, Hiwatari informs the plaintiff that he had shown the contract, signed by himself, to
the submanager of the Taiwan Bank who had given it as his opinion that he would be able to issue, upon request of
Hiwatari, a credit note for the contracted amount, but he added that the submanager was not personally able to place
his approval on the contract as that was a matter beyond his authority. Accordingly Hiwatari advised that he was
intending to make further arrangements when the manager of the bank should return from Formosa.
In the letter of May 5, 1921, containing Hiwatari's order for one thousand tons of bituminous limestone, it was stated that
if the material should prove satisfactory after being thoroughly tested by the Paving Department of the City of Tokio, he
would contract with the plaintiff for a minimum quantity of ten thousand additional tons, to be used within a year from
September 1, 1921, and that in this event the contract was to be automatically extended for an additional four years.
The contents of the letter of May 5 seems to have been conveyed, though imperfectly, by the plaintiff to his attorney, Mr.
Frank B. Ingersoll, of Manila; and on May 17, 1921, Ingersoll addressed a note to the defendant company in Cebu in
which he stated that he had been requested by the plaintiff to notify the defendant that the plaintiff had accepted an
order from Hiwatari, of Tokio, approved by the Bank of Taiwan, for a minimum order of ten thousand tons of the stone
annually for a period of five years, the first shipment of one thousand tons to be made as early after July 1 as possible.
It will be noted that this communication did not truly reflect the contents of Hiwatari's letter, which called unconditionally
for only one thousand tons, the taking of the remainder being contingent upon future eventualities.
It will be noted that the only written communications between the plaintiff and the defendant company in which the
former gave notice of having any orders for the sale of bituminous limestone are the four letters Exhibit Y, AA, BB, and
II. In the first of these letters, dated March 15, 1921, the plaintiff advises the defendant company to be prepared to ship
five thousand tons of bituminous limestone, to be consigned to John Chapman, Co., of San Francisco, to be loaded by
March 5, and a further consignment of five thousand tons, through a contract with Henry E. White, consignees to be
named later. In the letter Exhibit BB dated May 17, 1921, the plaintiff's attorney gives notice of the acceptance by
plaintiff of an order from Hiwatari, of Tokio, approved by the Bank of Taiwan, for a minimum of ten thousand annually for
a period of five years, first shipment of a thousand tons to be as early after July 1 as possible. In the letter Exhibit H the
plaintiff gives notice of an "additional" (?) order from H. E. White, Sydney, for two lots of bituminous limestone of five
thousand tons each, one for shipment not later than June 30, 1921, and the other by July 20, 1921. In the same letter
thousand tons from F. B. Smith, to be shipped to Brisbane, Australia, by June 30, and a similar amount within thirty days
later.
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After the suit was brought, the plaintiff filed an amendment to his complaint in which he set out, in tabulated form, the
orders which he claims to have received and upon which his letters of notification to the defendant company were
based. In this amended answer the name of Ludvigsen & McCurdy appears for the first time; and the name of Frank B.
Smith, of Sydney, is used for the first time as the source of the intended consignments of the letters, Exhibits G, L, M,
and W, containing the orders from Ludvigen & McCurdy, Frank B. Smith and H. Hiwatari were at no time submitted for
inspection to any officer of the defendant company, except possibly the Exhibit G, which the plaintiff claims to have
shown to Anderson in Manila on March, 12, 1921.
The different items conspiring the award which the trial judge gave in favor of the plaintiff are all based upon the orders
given by Ludvigsen & McCurdy (Exhibit G), by Frank B. Smith (Exhibit L and M), and by Hiwatari in Exhibit W; and the
appealed does not involve an order which came from Shanghai, China. We therefore now address ourselves to the
question whether or not the orders contained in Exhibit G, L, M, and W, in connection with the subsequent notification
thereof given by the plaintiff to the defendant, are sufficient to support the judgment rendered by the trial court.
The transaction indicated in the orders from Ludvigsen, & McCurdy and from Frank B. Smith must, in our opinion, be at
once excluded from consideration as emanating from persons who had been constituted mere agents of the plaintiff.
The San Francisco order and the Australian orders are the same in legal effect as if they were orders signed by the
plaintiff and drawn upon himself; and it cannot be pretended that those orders represent sales to bona fide purchasers
found by the plaintiff. The original contract by which the plaintiff was appointed sales agent for a limited period of time in
Australia and the United States contemplated that he should find reliable and solvent buyers who should be prepared to
obligate themselves to take the quantity of bituminous limestone contracted for upon terms consistent with the contract.
These conditions were not met by the taking of these orders from the plaintiff's own subagents, which was as if the
plaintiff had bought for himself the commodity which he was authorized to sell to others. Article 267 of the Code of
Commerce declares that no agent shall purchase for himself or for another that which he has been ordered to sell. The
law has placed its ban upon a broker's purchasing from his principal unless the latter with full knowledge of all the facts
and circumstances acquiesces in such course; and even then the broker's action must be characterized by the utmost
good faith. A sale made by a broker to himself without the consent of the principal is ineffectual whether the broker has
been guilty of fraudulent conduct or not. (4 R. C. L., 276-277.) We think, therefore, that the position of the defendant
company is indubitably sound in so far as it rest upon the contention that the plaintiff has not in fact found any bona
fide purchasers ready and able to take the commodity contracted for upon terms compatible with the contract which is
the basis of the action.
It will be observed that the contract set out at the beginning of this opinion contains provisions under which the period of
the contract might be extended. That privilege was probably considered a highly important incident of the contract and it
will be seen that the sale of five thousand tons which the plaintiff reported for shipment to San Francisco was precisely
adjusted to the purpose of the extension of the contract for the United States for the period of an additional year; and
the sales reported for shipment to Australia were likewise adjusted to the requirements for the extention of the contract
in that territory. Given the circumstances surrounding these contracts as they were reported to the defendant company
and the concealment by the plaintiff of the names of the authors of the orders, -- who after all were merely the plaintiff's
subagents, the officers of the defendant company might justly have entertained the suspicion that the real and only
person behind those contracts was the plaintiff himself. Such at least turns out to have been the case.
Much energy has been expended in the briefs upon his appeal over the contention whether the defendant was justified
in laying down the condition mentioned in the letter of March 26, 1921, to the effect that no order would be entertained
unless cash should be deposited with either the International Banking Corporation of the Chartered Bank of India,
Australia and China, in Cebu. In this connection the plaintiff points to the stipulation of the contract which provides that
contracts with responsible parties are to be accepted "subject to draft attached to bill of lading in full payment of such
shipment." What passed between the parties upon this point appears to have the character of mere diplomatic parrying,

as the plaintiff had no contract from any responsible purchaser other than his own subagents and the defendant
company could no probably have filled the contracts even if they had been backed by the Bank of England.
Upon inspection of the plaintiff's letters (Exhibit Y and AA), there will be found ample assurance that deposits for the
amount of each shipment would be made with a bank in Manila provided the defendant would indicated its ability to fill
the orders; but these assurance rested upon no other basis than the financial responsibility of the plaintiff himself, and
this circumstance doubtless did not escape the discernment of the defendant's officers.
With respect to the order from H. Hiwatari, we observe that while he intimates that he had been promised the exclusive
agency under the plaintiff for Japan, nevertheless it does not affirmatively appear that he had been in fact appointed to
be such at the time he signed to order Exhibit W at the request of the plaintiff. It may be assumed, therefore, that he
was at that time a stranger to the contract of agency. It clearly appears, however, that he did not expect to purchase the
thousand tons of bituminous limestone referred to in his order without banking assistance; and although the
submanager of the Bank of Taiwan had said something encouraging in respect to the matter, nevertheless that official
had refrained from giving his approval to the order Exhibit W. It is therefore not shown affirmatively that this order
proceeds from a responsible source.
The first assignment of error in the appellant's brief is directed to the action of the trial judge in refusing to admit Exhibit
2, 7, 8, 9 and 10, offered by the defendant, and in admitting Exhibit E, offered by the plaintiff. The Exhibit 2 is a letter
dated June 25, 1921, or more than three weeks after the action was instituted, in which the defendant's assistant
general manager undertakes to reply to the plaintiff's letter of March 29 proceeding. It was evidently intended as an
argumentative presentation of the plaintiff's point of view in the litigation then pending, and its probative value is so
slight, even if admissible at all, that there was no error on the part of the trial court in excluding it.
Exhibit 7, 8, 9 and 10 comprise correspondence which passed between the parties by mail or telegraph during the first
part of the year 1921. The subject-matter of this correspondence relates to efforts that were being made by Anderson to
dispose of the controlling in the defendant corporation, and Exhibit 9 in particular contains an offer from the plaintiff,
representing certain associates, to but out Anderson's interest for a fixed sum. While these exhibits perhaps shed some
light upon the relations of the parties during the time this controversy was brewing, the bearing of the matter upon the
litigation before us is too remote to exert any definitive influence on the case. The trial court was not in error in our
opinion in excluding these documents.
Exhibit E is a letter from Anderson to the plaintiff, dated April 21, 1920, in which information is given concerning the
property of the defendant company. It is stated in this letter that the output of the Lucio (quarry) during the coming year
would probably be at the rate of about five tons for twenty-four hours, with the equipment then on hand, but that with the
installation of a model cableway which was under contemplation, the company would be able to handle two thousand
tons in twenty-four hours. We see no legitimate reason for rejecting this document, although of slight probative value;
and her error imputed to the court in admitting the same was not committed.
Exhibit 14, which was offered in evidence by the defendant, consists of a carbon copy of a letter dated June 13, 1921,
written by the plaintiff to his attorney, Frank B. Ingersoll, Esq., of Manila, and in which plaintiff states, among other
things, that his profit from the San Francisco contract would have been at the rate of eigthy-five cents (gold) per ton.
The authenticity of this city document is admitted, and when it was offered in evidence by the attorney for the defendant
the counsel for the plaintiff announced that he had no objection to the introduction of this carbon copy in evidence if
counsel for the defendant would explain where this copy was secured. Upon this the attorney for the defendant informed
the court that he received the letter from the former attorneys of the defendant without explanation of the manner in
which the document had come into their possession. Upon this the attorney for the plaintiff made this announcement:
"We hereby give notice at this time that unless such an explanation is made, explaining fully how this carbon copy came
into the possession of the defendant company, or any one representing it, we propose to object to its admission on the
57 | P a g e

ground that it is a confidential communication between client and lawyer." No further information was then given by the
attorney for the defendant as to the manner in which the letter had come to his hands and the trial judge thereupon
excluded the document, on the ground that it was a privileged communication between client and attorney.
We are of the opinion that this ruling was erroneous; for even supposing that the letter was within the privilege which
protects communications between attorney and client, this privilege was lost when the letter came to the hands of the
adverse party. And it makes no difference how the adversary acquired possession. The law protects the client from the
effect of disclosures made by him to his attorney in the confidence of the legal relation, but when such a document,
containing admissions of the client, comes to the hand of a third party, and reaches the adversary, it is admissible in
evidence. In this connection Mr. Wigmore says:
The law provides subjective freedom for the client by assuring him of exemption from its processes of
disclosure against himself or the attorney or their agents of communication. This much, but not a whit more, is
necessary for the maintenance of the privilege. Since the means of preserving secrecy of communication are
entirely in the client's hands, and since the privilege is a derogation from the general testimonial duty and
should be strictly construed, it would be improper to extend its prohibition to third persons who obtain
knowledge of the communications. One who overhears the communication, whether with or without the
client's knowledge, is not within the protection of the privilege. The same rule ought to apply to one who
surreptitiously reads or obtains possession of a document in original or copy. (5 Wigmore on Evidence, 2d
ed., sec. 2326.)
Although the precedents are somewhat confusing, the better doctrine is to the effect that when papers are offered in
evidence a court will take no notice of how they were obtained, whether legally or illegally, properly or improperly; nor
will it form a collateral issue to try that question. (10 R. C. L., 931; 1 Greenl. Evid., sec. 254a; State vs. Mathers, 15 L. R.
A., 268; Gross vs. State, 33 L. R. A., [N. S.], 477, note.)
Our conclusion upon the entire record is that the judgment appealed from must be reversed; and the defendant will be
absolved from the complaint. It is so ordered, without special pronouncement as to costs of either instance.

G.R. No. 34098

September 17, 1930

ORIENT INSURANCE COMPANY, petitioner,

vs.
E. P. REVILLA, Judge of First Instance of Manila, and TEAL MOTOR CO., INC., respondents.
Gibbs and McDonough for petitioner.
Guevara, Francisco and Recto for respondents.
STREET, J.:
This is an original petition for writs of certiorari and mandamus filed in this court by the Orient Insurance Company
against the respondent judge of the Court of First Instance of Manila and the Teal Motor Co., Inc. The object of the
petition is to obtain an order requiring the respondent judge to permit the attorney for the petitioner to examine a letter
(Exhibits 49 and 49-Act) part of which has been read into the record in the course of the examination of one of the
witnesses testifying for the plaintiff in the case of Teal Motor Co., Inc. vs. Orient Insurance Company, now pending in the
Court of First Instance of the City of Manila, civil case No. 35825, with which, for purposes of trial, have been
consolidated several other cases of similar character. The cause is now before us for resolution upon the complaint and
answer interposed by the two respondents.
The respondent Teal Motor Co., Inc. is plaintiff in a civil action instituted in the Court of First Instance of Manila (civil
case No. 35825) for the purpose of recovering upon two fire insurance policies issued by the Orient Insurance
Company, aggregating P60,000, upon a stock of merchandise alleged to be of the value of P414,513.56, which, with the
exception of salvage valued at about P50,000, was destroyed by a fire on or about January 6, 1929. In one of the
clauses of the policies sued upon is a stipulation to the effect that all benefit under the policy would be forfeited if, in
case of loss, the claim should be rejected by the insurer and action or suit should not be commenced within three
months after such rejection. In the answer of the Orient Insurance Company, interposed in the civil case mentioned, it is
alleged, by way of defense, that the company rejected the claim on April 15, 1929, that notice of such rejection was
given to the plaintiff by letter on the same day, and that suit was not instituted on the policy until August 3, 1929, which
was more than three months after the rejection of the claim.
In a replication to the answer of the defendant, containing the foregoing and other defenses, the plaintiff admitted that
the adjusters of the defendant company had, on April 15, 1929, notified the plaintiff that the Orient Insurance Company
would not pay the claim, basing refusal upon alleged incendiarism and fraud on the part of the plaintiff; and by way of
avoidance, it was alleged in the replication that, after notification of denial of liability by the insurance company, one E.
E. Elser, as representative of the company, expressly requested the plaintiff to defer judicial action until after the
following July 31, stating that three were great possibilities that an extrajudicial compromise might be arranged in the
matter; and it was further asserted, in the replication, that the plaintiff had deferred action, relying upon this request.
It will thus be seen that the reason for the admitted delay in the institution of the action is an important issue in the case,
or case, now in course of trial.
It further appears that while case No. 35825 was in course of trial, as it still is, before the respondent judge, in the Court
of First Instance of Manila, the witness E. M. Bachrach, president of the Teal Motor Co., Inc., while being examined in
chief by the attorneys for the plaintiff, and speaking of the circumstances surrounding the institution of the action, said
that he had reported certain conversations to plaintiff's attorneys, and he added: "I waited for about a week longer and
not having heard anything about it, in the meantime, on the 13th of July, I received a letter from our attorneys, Guevara,
58 | P a g e

Francisco & Recto, urging me to file these cases." The attorney for the defendant, Orient Insurance Company,
thereupon interposed, saying: "I ask that the witness be required to produce the letter referred to from Mr. Guevara, or
else his answer be stricken out. (To the witness) Have you got the letter there?" The witness replied that he had the
letter with him and that he had no objection to show that part of the letter in which Guevara urged him to proceed with
the cases. Upon being asked about the other part of the letter, the witness said that the other part contained private
matter, "between the attorney and ourselves," meaning between the Teal Motor Co., Inc., and its attorneys. Thereupon
the attorney for the defendant, Orient Insurance Company, said he would like to see the letter, inquiring as to its date.
The witness replied that it bore date of July 13, 1929; and upon the court inquiring whether the witness had any
objection to the reading of the letter by the attorney for the defendant, the witness replied that he wished to consult with
his attorney. Upon this the attorney for the adversary party, the Orient Insurance Company, suggested that he would like
to have the letter marked without his reading it, and it was accordingly marked as Exhibit 49. The attorney then said: "In
view of the production of the letter, I withdraw the objection to the statement of the witness as to its contents," and he
added: "I now ask the permission of the court to read the letter for my information." The court thereupon inquired of the
attorney for the Teal Motor Co., Inc., whether he had any objection, and the attorney observed that he would have no
objection to the disclosing of that part of the letter which referred exactly to the point of the urging of the filing of the
complaints, and he added: "Unfortunately, the other part of the letter being a communication between a client and
attorney, I don't think, if your Honor please, it can be disclosed without the consent of both."
In the course of the colloquy which thereupon unsued between the attorney for the plaintiff and the attorney for the
defendant, it was stated by the attorney for the plaintiff that only a part of the letter had anything to do with the urging of
the presentation of the complaints in the cases to which the witness had testified, and that the other part of the letter
referred to the contract of fees, or retaining of the services of plaintiff's attorneys in connection with said cases, a matter,
so the attorney suggested, entirely distinct from the urging of the presentation of the cases. The attorney for the
defendant thereupon insisted before the court that, inasmuch as all the letter refers to the case then in court, the entire
document should be exhibited, in conformity with the rule that when part of a document is offered in evidence, the entire
document must be presented.
Upon this the respondent judge ruled as follows: "Objection of the counsel for the plaintiff and the witness, Mr.
Barchrach, to the showing or reading of the whole letter in the record is sustained, and it is ordered that only that part of
the letter which has been referred to by Mr. Bachrach in his testimony be read and transcribed into the record." To this
ruling the attorney for the defendant excepted and the respondent judge then said: "Let that part of the letter pointed out
by Mr. Bachrach be transcribed in the record;" whereupon the following part of the letter was read out in court and
incorporated in the transcript.
July 13, 1929
DEAR SIR: As you know, your attorney Mr. Basilio Francisco has turned over to us, prior to his departure, all
the papers in connection with the insurance claim of the Teal Motor Co., Inc., on destroyed or burned
merchandise, and everything is now ready for filing of the corresponding complaints in the Court of First
Instance.
When the matter above quoted had been thus read into the record, the attorney for the defendant made the following
observation: "In view of the fact that counsel for the plaintiff has just now read into the record and presented as
evidence a part of the letter of July 13, I now request that the entire letter be produced." This request was overruled by
the court, and the attorney for the defendant excepted. After further discussion, upon the suggestion of the attorney for
the defendant and by agreement of the counsel for both parties, the second page of the letter was marked 49-A by the
clerk court.

The incident was renewed when it came at turn of the attorney for the defendant to cross-examine the same witness E.
M. Bachrach, when the attorney for the defendant, having ascertained from the witness that he still had the letter in his
possession, and that he had not answered it in writing, formally offered the letter in evidence. The attorney for the
plaintiff again objected, on the ground that the letter was of a privileged nature and that it was the personal property of
the witness. Thereupon the court, receiving the letter in hand from the witness, observed that he had already ruled upon
it, and after further discussion, the court sustained the objection of the attorney for the plaintiff and refused to admit in
evidence so much of the letter as had not already been read into the record. The attorney for the defendant again
excepted.
At a later stage of the trial the attorney interposed a formal motion for reconsideration of the ruling of the court in
refusing to admit the letter in evidence, or the part of it not already incorporated in the record. The court, however,
adhered to its original ruling, and the attorney for the defendant excepted. Another incident that might be noted, though
not alleged as a ground of relief in the petition before us, but set forth in the answer of the respondents, is that the
attorney for the defendant procured a subpoena duces tecum to be issued by the clerk of court requiring the attorneys
for the plaintiff to produce in court certain papers including the letter which gave rise to the present controversy. The
court, on motion of the attorneys for the plaintiff, quashed said subpoena.
The essential character of this incident, which we have perhaps narrated with unnecessary prolixity, is readily
discernible. A witness for the plaintiff made an oral statement as to the substance of part of a letter which had been
received by the plaintiff from its attorney, and when the fact was revealed that the communication had been made by
letter, the attorney for the defendant requested that the witness be required to produce the letter in court, and if not, that
his answer should be stricken out. This in legal effect was a demand for the production of "the best evidence," it being a
well-known rule of law that a witness cannot be permitted to give oral testimony as to the contents of a paper writing
which can be produced in court. In response to this request that portion of the letter to which the witness had
supposedly referred was read into the record.
The respondent judge appears to have considered that the excerpt from the letter thus incorporated in the record was
either proof of the defendant, its production having been demanded by defendant's counsel, or that at least the legal
responsibility for the incorporation of said excerpt into the record was attributable to the defendant. We are unable to
accept this view. The incorporation of this excerpt from the letter was a necessary support of the oral statement which
the witness had made, and if this basis for such statement had not been laid by the incorporation of the excerpt into the
record, the oral statement of the witness concerning the tenor of the letter should properly have been stricken out. But
instead of withdrawing the oral statement of the witness concerning the nature of the written communication, the witness
produced the letter and the part of it already quoted was read into the record. The excerpt in question must therefore be
considered as proof submitted by the plaintiff; and there can be no question that, part of the letter having been
introduced in behalf of the plaintiff, the whole of the letter could properly be examined by the other party, in accordance
with the express provision of section 283 of the Code of Civil Procedure.
It was stated in the court by the attorney for the plaintiff, in opposing the introduction of other portions of the letter in
proof, that the other parts were privileged, because they related to the terms of employment between attorney and
client, or to the fee to be paid to the attorney. With respect to this point it is difficult to see how a contract for fees could
be considered privileged. Irrelevant it might, under certain circumstances, certainly be, but not privileged. Of course
contracts between attorneys and clients are inherently personal and private matters, but they are a constant subject of
litigation, and contracts relating to fees are essentially not of privileged nature. Privilege primarily refers to
communications from client to attorney, an idea which of course includes communications from attorney to client relative
to privileged matters.
But, even supposing that the matter contained in the letter and withheld from the inspection of the adversary was
originally of a privileged nature, the privilege was waived by the introduction in evidence of part of the letter. The
59 | P a g e

provision in section 283 of the Code of Civil Procedure making the whole of a declaration, conversation, or writing
admissible when part has been given in evidence by one party, makes no exception as to privileged matter; and the
jurisprudence on the subject does not recognize any exception. Practically every feature of the question now under
consideration was involved in the case of Western Union Tel. Co. vs. Baltimore & Ohio Tel. Co. (26 Fed., 55), which in
1885 came before Wallace, J., a distinguished jurist presiding in the Federal Circuit Court of the Southern District of
New York. The substance of the case is well stated in the note to Kelly vs. Cummens (20 Am. & Eng. Ann. Cases, 1283,
1287), from which we quote as follows:
In Western Union Tel. Co. vs. Baltimore, etc., Tel. Co. (26 Fed., 55), it appeared that upon a motion in the
cause, which was in equity for a preliminary injunction, one of the questions involved was whether a reissued
patent upon which the suit was founded was obtained for the legitimate purpose of correcting mistake or
inadvertence in the specification and claims of the original, or whether it was obtained merely for the purpose
of expanding the claims of the original in order to subordinate to the reissue certain improvements or
inventions made by others after the grant of the original patent and before the application for the reissue. To
fortify its theory of the true reasons for obtaining the reissue, the complainant upon that motion embodied in
affidavits extracts from communications made by a patent expert and attorney in the office of the solicitor
general of the complainant, to the president and the vice-president of the complainant, when the subject of
applying for a reissue was under consideration by the officers of the complainant, and while the proceedings
for a reissue were pending. After the cause had proceeded to the taking of proofs for final hearing the
defendant sought to introduce in evidence the original communications, extracts from which were used by the
complainant upon the motion for an injunction, on the ground that the parts of the communication which were
not disclosed had an important bearing upon the history of the application for a reissue, and indicated that it
was not made for any legitimate purpose. The complainant resisted the efforts of the defendant to have the
original communications admitted, on the ground that they were privileged as made to its officers by its
attorney, but it was held that the defendant was entitled to introduce them in evidence, the court saying: "The
question, then, is whether the complainant can shelter itself behind its privilege to insist upon the privacy of
the communications between its attorney and its other officers as confidential communications, when it has
itself produced fragmentary part of them, and sought to use them as a weapon against the defendant to
obtain the stringent remedy of a preliminary injunction. Assuming that the communications addressed to the
president and vice-president of the complainant by Mr. Buckingham were communications made to the
complainant by its attorney, and as such privileged at the option of the complainant, it was competent for the
complainant to waive its privilege. It would hardly be contended that the complainant could introduce extracts
from these communications as evidence in its own behalf for the purpose of a final hearing, and yet withhold
the other parts if their production were required by the defendant. A party cannot waive such a privilege
partially. He cannot remove the seal of secrecy from so much of the privileged communications as makes for
his advantage, and insist that it shall not be removed as to so much as makes to the advantage of his
adversary, or may neutralize the effect of such as has been introduced. Upon the principle it would seem that
it cannot be material at what stage of the proceedings in a suit a party waives his right to maintain the secrecy
of privileged communication. All the proceedings in the cause are constituent parts of the controversy, and it
is not obvious how any distinction can obtain as to the effect of waiver when made by a party for the purpose
of obtaining temporary relief and when made by him to obtain final relief."
From the foregoing decision and other cases contained in the note referred to, we are led to the conclusion that the
attorney for the defendant in the court below was entitled to examine the whole of the letter (Exhibit 49 and 49-A), with a
view to the introduction in evidence of such parts thereof as may be relevant to the case on trial, and the respondent
judge was in error in refusing to permit the inspection of the letter by said attorney.
It is suggested in the argument for the respondents that the question of the admissibility in evidence of the parts of the
letter not already read into the record was prematurely raised, and that the attorney for the defendant should have
waited until it became his turn to present evidence in chief, when, as is supposed, the question could have been

properly raised. We are of the opinion, however, that if the attorney for the defendant had a right to examine the letter, it
should have been produced when he asked for it on the cross-examination of the witness who had the letter in his
possession. Besides, in the lengthy discussions between court and attorneys, occuring at different times, there was not
the slightest suggestion from the court that the parts of the letter which were held inadmissible would be admitted at any
time. Furthermore, the action of the court in quashing the subpoena duces tecum for the production of the letter shows
that the court meant to rule that the letter could not be inspected at all by the attorney for the defendant.
Objection is also here made by the attorney for the respondents to the use of the writ of mandamus for the purpose of
correcting the error which is supposed to have been committed. The situation presented is, however, one where the
herein petitioner has no other remedy. The letter which the petitioner seeks to examine has been ruled inadmissible, as
to the parts not introduced in evidence by the defendant in the court below, and the respondent judge had not permitted
the document to become a part of the record in such a way that the petitioner could take advantage of the error upon
appeal to this court. It is idle to discuss whether other remedy would be speedy or adequate when there is no remedy at
all. This court is loath, of course, to interfere in course of the trial of a case in a Court of First Instance, as such
interference might frequently prolong unduly the litigation in that court. But this case has been pending before the
respondent judge for a considerable period of time, and undoubtedly the probatory period will be necessarily extended
much longer. Under these circumstances, the action of this court in entertaining the present application will either be
conductive to the speedy determination of case, or at least will not appreciably extend the proceedings.
It goes without saying that the subject matter of the contention is of a nature which makes the use of the writ
ofmandamus appropriate, since the right from the exercise of which the petitioner is excluded is one to which it is
entitled under the law and the duty to be performed is one pertaining to the respondent judge in his official capacity.
From what has been said it follows that the writ of mandamus prayed for will be granted, and the respondent judge is
directed to permit the attorney for the defendant (petitioner here) to inspect the letter (Exhibit 49 and 49-A) with a view
to the introduction in evidence of such parts thereof as may be relevant to the issues made by the pleadings in civil case
No. 35825 and other cases which have been consolidated with it for trial. So ordered, with costs against the respondent
Teal Motor Co., Inc.

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Hickman v. Taylor
329 U.S. 495 (1947)
Mr. Justice MURPHY delivered the opinion of the Court.
This case presents an important problem under the Federal Rules of Civil Procedure as to the extent to which a party
may inquire into oral and written statements of witnesses, or other information, secured by an adverse party's counsel in
the course of preparation for possible litigation after a claim has arisen. Examination into a person's files and records,
including those resulting from the professional activities of an attorney, must be judged with care. It is not without reason
that various safeguards have been established to preclude unwarranted excursions into the privacy of a man's work. At
the same time, public policy supports reasonable and necessary inquiries. Properly to balance these competing
interests is a delicate and difficult task.
On February 7, 1943, the tug "J.M. Taylor" sank while engaged in helping to tow a car float of the Baltimore & Ohio
Railroad across the Delaware River at Philadelphia. The accident was apparently unusual in nature, the cause of it still
being unknown. Five of the nine crew members were drowned. Three days later the tug owners and the underwriters
employed a law firm, of which respondent Fortenbaugh is a member, to defend them against potential suits by
representatives of the deceased crew members and to sue the railroad for damages to the tug.
A public hearing was held on March 4, 1943, before the United States Steamboat Inspectors, at which the four survivors
were examined. This testimony was recorded and made available to all interested parties. Shortly thereafter,
Fortenbaugh privately interviewed the survivors and took statements from them with an eye toward the anticipated
litigation; the survivors signed these statements on March 29. Fortenbaugh also interviewed other persons believed to
have some information relating to the accident and in some cases he made memoranda of what they told him. At the
time when Fortenbaugh secured the statements of the survivors, representatives of two of the deceased crew members
had been in communication with him. Ultimately claims were presented by representatives of all five of the deceased;
four of the claims, however, were settled without litigation. The fifth claimant, petitioner herein, brought suit in a federal
court under the Jones Act on November 26, 1943, naming as defendants the two tug owners, individually and as
partners, and the railroad.

The tug owners, through Fortenbaugh, answered all of the interrogatories except No. 38 and the supplemental ones just
described. While admitting that statements of the survivors had been taken, they declined to summarize or set forth the
contents. They did so on the ground that such requests called "for privileged matter obtained in preparation for litigation"
and constituted "an attempt to obtain directly counsel's private files." It was claimed that answering these requests
"would involve practically turning over not only the complete files, but also the telephone records and, almost, the
thoughts of counsel."
In connection with the hearing on these objections, Fortenbaugh made a written statement and gave an informal oral
deposition explaining the circumstances under which he had taken the statements. But he was not expressly asked in
the deposition to produce the statements. The District Court for the Eastern District of Pennsylvania, sitting en banc,
held that the requested matters were not privileged. 4 F.R.D. 479. The court then decreed that the tug owners and
Fortenbaugh, as counsel and agent for the tug owners, forthwith

answer Plaintiff's 38th interrogatory and supplementary interrogatories; produce all written statements of witnesses
obtained by Mr. Fortenbaugh, as counsel and agent for Defendants; state in substance any fact concerning this case
which Defendants learned through oral statements made by witnesses to Mr. Fortenbaugh whether or not included in
his private memoranda and produce Mr. Fortenbaugh's memoranda containing statements of fact by witnesses or to
submit these memoranda to the Court for determination of those portions which should be revealed to Plaintiff.

Upon their refusal, the court adjudged them in contempt and ordered them imprisoned until they complied....

The pre-trial deposition-discovery mechanism established by Rules 26 to 37 is one of the most significant innovations of
the Federal Rules of Civil Procedure. Under the prior federal practice, the pre-trial functions of notice-giving, issueformulation and fact-revelation were performed primarily and inadequately by the pleadings. Inquiry into the issues and
the facts before trial was narrowly confined and was often cumbersome in method. The new rules, however, restrict the
pleadings to the task of general notice-giving and invest the deposition-discovery process with a vital role in the
preparation for trial....

One year later, petitioner filed 39 interrogatories directed to the tug owners. The 38th interrogatory read:
State whether any statements of the members of the crews of the Tugs "J.M. Taylor" and "Philadelphia" or of any other
vessel were taken in connection with the towing of the car float and the sinking of the Tug "John M. Taylor." Attach
hereto exact copies of all such statements if in writing, and if oral, set forth in detail the exact provisions of any such oral
statements or reports.
Supplemental interrogatories asked whether any oral or written statements, records, reports or other memoranda had
been made concerning any matter relative to the towing operation, the sinking of the tug, the salvaging and repair of the
tug, and the death of the deceased. If the answer was in the affirmative, the tug owners were then requested to set forth
the nature of all such records, reports, statements or other memoranda.

61 | P a g e

We agree, of course, that the deposition-discovery rules are to be accorded a broad and liberal treatment. No longer
can the time-honored cry of "fishing expedition" serve to preclude a party from inquiring into the facts underlying his
opponent's case. Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To
that end, either party may compel the other to disgorge whatever facts he has in his possession. The depositiondiscovery procedure simply advances the stage at which the disclosure can be compelled from the time of trial to the
period preceding it, thus reducing the possibility of surprise. But discovery, like all matters of procedure, has ultimate
and necessary boundaries. As indicated by Rules 30(b) and (d) and 31(d), limitations inevitably arise when it can be
shown that the examination is being conducted in bad faith or in such a manner as to annoy, embarrass or oppress the
person subject to the inquiry. And as Rule 26(b) provides, further limitations come into existence when the inquiry
touches upon the irrelevant or encroaches upon the recognized domains of privilege.

We also agree that the memoranda, statements and mental impressions in issue in this case fall outside the scope of
the attorney-client privilege and hence are not protected from discovery on that basis. It is unnecessary here to
delineate the content and scope of that privilege as recognized in the federal courts. For present purposes, it suffices to
note that the protective cloak of this privilege does not extend to information which an attorney secures from a witness
while acting for his client in anticipation of litigation. Nor does this privilege concern the memoranda, briefs,
communications and other writings prepared by counsel for his own use in prosecuting his client's case; and it is equally
unrelated to writings which reflect an attorney's mental impressions, conclusions, opinions or legal theories.

But the impropriety of invoking that privilege does not provide an answer to the problem before us. Petitioner has made
more than an ordinary request for relevant, non-privileged facts in the possession of his adversaries or their counsel. He
has sought discovery as of right of oral and written statements of witnesses whose identity is well known and whose
availability to petitioner appears unimpaired. He has sought production of these matters after making the most
searching inquiries of his opponents as to the circumstances surrounding the fatal accident, which inquiries were sworn
to have been answered to the best of their information and belief. Interrogatories were directed toward all the events
prior to, during and subsequent to the sinking of the tug. Full and honest answers to such broad inquiries would
necessarily have included all pertinent information gleaned by Fortenbaugh through his interviews with the witnesses.
Petitioner makes no suggestion, and we cannot assume, that the tug owners or Fortenbaugh were incomplete or
dishonest in the framing of their answers. In addition, petitioner was free to examine the public testimony of the
witnesses taken before the United States Steamboat Inspectors. We are thus dealing with an attempt to secure the
production of written statements and mental impressions contained in the files and the mind of the attorney Fortenbaugh
without any showing of necessity or any indication or claim that denial of such production would unduly prejudice the
preparation of petitioner's case or cause him any hardship or injustice. For aught that appears, the essence of what
petitioner seeks either has been revealed to him already through the interrogatories or is readily available to him direct
from the witnesses for the asking.

The District Court, after hearing objections to petitioner's request, commanded Fortenbaugh to produce all written
statements of witnesses and to state in substance any facts learned through oral statements of witnesses to him.
Fortenbaugh was to submit any memoranda he had made of the oral statements so that the court might determine what
portions should be revealed to petitioner. All of this was ordered without any showing by petitioner, or any requirement
that he make a proper showing, of the necessity for the production of any of this material or any demonstration that
denial of production would cause hardship or injustice. The court simply ordered production on the theory that the facts
sought were material and were not privileged as constituting attorney-client communications.

In our opinion, neither Rule 26 nor any other rule dealing with discovery contemplates production under such
circumstances. That is not because the subject matter is privileged or irrelevant, as those concepts are used in these
rules. Here is simply an attempt, without purported necessity or justification, to secure written statements, private
memoranda and personal recollections prepared or formed by an adverse party's counsel in the course of his legal
duties. As such, it falls outside the arena of discovery and contravenes the public policy underlying the orderly
prosecution and defense of legal claims. Not even the most liberal of discovery theories can justify unwarranted
inquiries into the files and the mental impressions of an attorney.

62 | P a g e

Historically, a lawyer is an officer of the court and is bound to work for the advancement of justice while faithfully
protecting the rightful interests of his clients. In performing his various duties, however, it is essential that a lawyer work
with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel. Proper
preparation of a client's case demands that he assemble information, sift what he considers to be the relevant from the
irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference. That is the
historical and the necessary way in which lawyers act within the framework of our system of jurisprudence to promote
justice and to protect their clients' interests. This work is reflected, of course, in interviews, statements, memoranda,
correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways--aptly
though roughly termed by the Circuit Court of Appeals in this case as the "work product of the lawyer." Were such
materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten.
An attorney's thoughts, heretofore inviolate, would not be his own. Inefficiency, unfairness and sharp practices would
inevitably develop in the giving of legal advice and in the preparation of cases for trial. The effect on the legal profession
would be demoralizing. And the interests of the clients and the cause of justice would be poorly served.

We do not mean to say that all written materials obtained or prepared by an adversary's counsel with an eye toward
litigation are necessarily free from discovery in all cases. Where relevant and non-privileged facts remain hidden in an
attorney's file and where production of those facts is essential to the preparation of one's case, discovery may properly
be had. Such written statements and documents might, under certain circumstances, be admissible in evidence or give
clues as to the existence or location of relevant facts. Or they might be useful for purposes of impeachment or
corroboration. And production might be justified where the witnesses are no longer available or can be reached only
with difficulty. Were production of written statements and documents to be precluded under such circumstances, the
liberal ideals of the deposition-discovery portions of the Federal Rules of Civil Procedure would be stripped of much of
their meaning. But the general policy against invading the privacy of an attorney's course of preparation is so well
recognized and so essential to an orderly working of our system of legal procedure that a burden rests on the one who
would invade that privacy to establish adequate reasons to justify production through a subpoena or court order. That
burden, we believe, is necessarily implicit in the rules as now constituted.
Rule 30(b), as presently written, gives the trial judge the requisite discretion to make a judgment as to whether
discovery should be allowed as to written statements secured from witnesses. But in the instant case there was no room
for that discretion to operate in favor of the petitioner. No attempt was made to establish any reason why Fortenbaugh
should be forced to produce the written statements. There was only a naked, general demand for these materials as of
right and a finding by the District Court that no recognizable privilege was involved. That was insufficient to justify
discovery under these circumstances and the court should have sustained the refusal of the tug owners and
Fortenbaugh to produce.
But as to oral statements made by the witnesses to Fortenbaugh, whether presently in the form of his mental
impressions or memoranda, we do not believe that any showing of necessity can be made under the circumstances of
this case so as to justify production. Under ordinary conditions, forcing an attorney to repeat or write out all that
witnesses have told him and to deliver this account to his adversary gives rise to grave dangers of inaccuracy and
untrustworthiness. No legitimate purpose is served by such production. The practice forces the attorney to testify as to
what he remembers or what he saw fit to write down regarding witnesses' remarks. Such testimony could not qualify as
evidence; and to use it for impeachment or corroborative purposes would make the attorney much less an officer of the
court and much more an ordinary witness. The standards of the profession would thereby suffer.

Denial of production of this nature does not mean that any material, non-privileged facts can be hidden from the
petitioner in this case. He need not be unduly hindered in the preparation of his case, in the discovery of facts or in his
anticipation of his opponents' position. Searching interrogatories directed to Fortenbaugh and the tug owners,
production of written documents and the statements upon a proper showing and direct interviews with the witnesses
themselves all serve to reveal the facts in Fortenbaugh's possession to the fullest possible extent consistent with public
policy. Petitioner's counsel frankly admits that he wants the oral statements only to help prepare himself to examine
witnesses and to make sure that he has overlooked nothing. That is insufficient under the circumstances to permit him
an exception to the policy underlying the privacy of Fortenbaugh's professional activities. If there should be a rare
situation justifying production of these matters, petitioner's case is not of that type.
We fully appreciate the wide-spread controversy among the members of the legal profession over the problem raised by
this case. It is a problem that rests on what has been one of the most hazy frontiers of the discovery process. But until
some rule or statute definitely prescribes otherwise, we are not justified in permitting discovery in a situation of this
nature as a matter of unqualified right. When Rule 26 and the other discovery rules were adopted, this Court and the
members of the bar in general certainly did not believe or contemplate that all the files and mental processes of lawyers
were thereby opened to the free scrutiny of their adversaries. And we refuse to interpret the rules at this time so as to
reach so harsh and unwarranted a result.
We therefore affirm the judgment of the Circuit Court of Appeals.
Affirmed.

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UPJOHN CO. v. UNITED STATES, 449 U.S. 383 (1981)

449 U.S. 383
UPJOHN CO. ET AL. v. UNITED STATES ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
No. 79-886.
Argued November 5, 1980
Decided January 13, 1981
When the General Counsel for petitioner pharmaceutical manufacturing corporation (hereafter petitioner) was informed
that one of its foreign subsidiaries had made questionable payments to foreign government officials in order to secure
government business, an internal investigation of such payments was initiated. As part of this investigation, petitioner's
attorneys sent a questionnaire to all foreign managers seeking detailed information concerning such payments, and the
responses were returned to the General Counsel. The General Counsel and outside counsel also interviewed the
recipients of the questionnaire and other company officers and employees. Subsequently, based on a report voluntarily
submitted by petitioner disclosing the questionable payments, the Internal Revenue Service (IRS) began an
investigation to determine the tax consequences of such payments and issued a summons pursuant to 26 U.S.C. 7602
demanding production of, inter alia, the questionnaires and the memoranda and notes of the interviews. Petitioner
refused to produce the documents on the grounds that they were protected from disclosure by the attorney-client
privilege and constituted the work product of attorneys prepared in anticipation of litigation. The United States then filed
a petition in Federal District Court seeking enforcement of the summons. That court adopted the Magistrate's
recommendation that the summons should be enforced, the Magistrate having concluded, inter alia, that the attorneyclient privilege had been waived and that the Government had made a sufficient showing of necessity to overcome the
protection of the work-product doctrine. The Court of Appeals rejected the Magistrate's finding of a waiver of the
attorney-client privilege, but held that under the so-called "control group test" the privilege did not apply "[t]o the extent
that the communications were made by officers and agents not responsible for directing [petitioner's] actions in
response to legal advice . . . for the simple reason that the communications were not the `client's.'" The court also held
that the work-product doctrine did not apply to IRS summonses.
Held:
1. The communications by petitioner's employees to counsel are covered by the attorney-client privilege insofar as the
responses to the [449 U.S. 383, 384] questionnaires and any notes reflecting responses to interview questions are
concerned. Pp. 389-397.
(a) The control group test overlooks the fact that such privilege exists to protect not only the giving of professional
advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and
informed advice. While in the case of the individual client the provider of information and the person who acts on the
lawyer's advice are one and the same, in the corporate context it will frequently be employees beyond the control group
(as defined by the Court of Appeals) who will possess the information needed by the corporation's lawyers. Middle-level
- and indeed lower-level - employees can, by actions within the scope of their employment, embroil the corporation in
serious legal difficulties, and it is only natural that these employees would have the relevant information needed by
corporate counsel if he is adequately to advise the client with respect to such actual or potential difficulties. Pp. 390-392.
(b) The control group test thus frustrates the very purpose of the attorney-client privilege by discouraging the
communication of relevant information by employees of the client corporation to attorneys seeking to render legal advice
to the client. The attorney's advice will also frequently be more significant to noncontrol employees than to those who
officially sanction the advice, and the control group test makes it more difficult to convey full and frank legal advice to the
employees who will put into effect the client corporation's policy. P. 392.
(c) The narrow scope given the attorney-client privilege by the Court of Appeals not only makes it difficult for corporate
attorneys to formulate sound advice when their client is faced with a specific legal problem but also threatens to limit the
valuable efforts of corporate counsel to ensure their client's compliance with the law. Pp. 392-393.
(d) Here, the communications at issue were made by petitioner's employees to counsel for petitioner acting as such, at
the direction of corporate superiors in order to secure legal advice from counsel. Information not available from upper64 | P a g e

echelon management was needed to supply a basis for legal advice concerning compliance with securities and tax
laws, foreign laws, currency regulations, duties to shareholders, and potential litigation in each of these areas. The
communications concerned matters within the scope of the employees' corporate duties, and the employees themselves
were sufficiently aware that they were being questioned in order that the corporation could obtain legal advice. Pp. 394395.
2. The work-product doctrine applies to IRS summonses. Pp. 397-402.
(a) The obligation imposed by a tax summons remains subject to the traditional privileges and limitations, and nothing in
the language [449 U.S. 383, 385] or legislative history of the IRS summons provisions suggests an intent on the part of
Congress to preclude application of the work-product doctrine. P. 398.
(b) The Magistrate applied the wrong standard when he concluded that the Government had made a sufficient showing
of necessity to overcome the protections of the work-product doctrine. The notes and memoranda sought by the
Government constitute work product based on oral statements. If they reveal communications, they are protected by the
attorney-client privilege. To the extent they do not reveal communications they reveal attorneys' mental processes in
evaluating the communications. As Federal Rule of Civil Procedure 26, which accords special protection from disclosure
to work product revealing an attorney's mental processes, and Hickman v. Taylor, 329 U.S. 495 , make clear, such work
product cannot be disclosed simply on a showing of substantial need or inability to obtain the equivalent without undue
hardship. P. 401.
600 F.2d 1223, reversed and remanded.
REHNQUIST, J., delivered the opinion of the Court, in which BRENNAN, STEWART, WHITE, MARSHALL, BLACKMUN,
POWELL, and STEVENS, JJ., joined, and in Parts I and III of which BURGER, C. J., joined. BURGER, C. J., filed an
opinion concurring in part and concurring in the judgment, post, P. 402.
Daniel M. Gribbon argued the cause and filed briefs for petitioners.
Deputy Solicitor General Wallace argued the cause for respondents. With him on the brief were Solicitor General
McCree, Assistant Attorney General Ferguson, Stuart A. Smith, and Robert E. Lindsay. *
[ Footnote * ] Briefs of amici curiae urging reversal were filed by Leonard S. Janofsky, Leon Jaworski, and Keith A.
Jones for the American Bar Association; by Thomas G. Lilly, Alfred F. Belcuore, Paul F. Rothstein, and Ronald L.
Carlson for the Federal Bar Association; by Erwin N. Griswold for the American College of Trial Lawyers et al.; by
Stanley T. Kaleczyc and J. Bruce Brown for the Chamber of Commerce of the United States; and by Lewis A. Kaplan,
James N. Benedict, Brian D. Forrow, John G. Koeltl, Standish Forde Medina, Jr., Renee J. Roberts, and Marvin Wexler
for the Committee on Federal Courts et al.
William W. Becker filed a brief for the New England Legal Foundation as amicus curiae. [449 U.S. 383, 386]
JUSTICE REHNQUIST delivered the opinion of the Court.
We granted certiorari in this case to address important questions concerning the scope of the attorney-client privilege in
the corporate context and the applicability of the work-product doctrine in proceedings to enforce tax summonses. 445
U.S. 925 . With respect to the privilege question the parties and various amici have described our task as one of
choosing between two "tests" which have gained adherents in the courts of appeals. We are acutely aware, however,
that we sit to decide concrete cases and not abstract propositions of law. We decline to lay down a broad rule or series
of rules to govern all conceivable future questions in this area, even were we able to do so. We can and do, however,
conclude that the attorney-client privilege protects the communications involved in this case from compelled disclosure
and that the work-product doctrine does apply in tax summons enforcement proceedings.
I
Petitioner Upjohn Co. manufactures and sells pharmaceuticals here and abroad. In January 1976 independent
accountants conducting an audit of one of Upjohn's foreign subsidiaries discovered that the subsidiary made payments
to or for the benefit of foreign government officials in order to secure government business. The accountants so
informed petitioner Mr. Gerard Thomas, Upjohn's Vice President, Secretary, and General Counsel. Thomas is a member
of the Michigan and New York Bars, and has been Upjohn's General Counsel for 20 years. He consulted with outside
counsel and R. T. Parfet, Jr., Upjohn's Chairman of the Board. It was decided that the company would conduct an
internal investigation of what were termed "questionable payments." As part of this investigation the attorneys prepared
a letter containing a questionnaire which was sent to "All Foreign General and Area Managers" over the Chairman's
signature. The letter [449 U.S. 383, 387] began by noting recent disclosures that several American companies made

"possibly illegal" payments to foreign government officials and emphasized that the management needed full information
concerning any such payments made by Upjohn. The letter indicated that the Chairman had asked Thomas, identified
as "the company's General Counsel," "to conduct an investigation for the purpose of determining the nature and
magnitude of any payments made by the Upjohn Company or any of its subsidiaries to any employee or official of a
foreign government." The questionnaire sought detailed information concerning such payments. Managers were
instructed to treat the investigation as "highly confidential" and not to discuss it with anyone other than Upjohn
employees who might be helpful in providing the requested information. Responses were to be sent directly to Thomas.
Thomas and outside counsel also interviewed the recipients of the questionnaire and some 33 other Upjohn officers or
employees as part of the investigation.
On March 26, 1976, the company voluntarily submitted a preliminary report to the Securities and Exchange Commission
on Form 8-K disclosing certain questionable payments. 1 A copy of the report was simultaneously submitted to the
Internal Revenue Service, which immediately began an investigation to determine the tax consequences of the
payments. Special agents conducting the investigation were given lists by Upjohn of all those interviewed and all who
had responded to the questionnaire. On November 23, 1976, the Service issued a summons pursuant to 26 U.S.C.
7602 demanding production of:
"All files relative to the investigation conducted under the supervision of Gerard Thomas to identify payments to
employees of foreign governments and any political [449 U.S. 383, 388] contributions made by the Upjohn Company
or any of its affiliates since January 1, 1971 and to determine whether any funds of the Upjohn Company had been
improperly accounted for on the corporate books during the same period.
"The records should include but not be limited to written questionnaires sent to managers of the Upjohn Company's
foreign affiliates, and memorandums or notes of the interviews conducted in the United States and abroad with officers
and employees of the Upjohn Company and its subsidiaries." App. 17a-18a.
The company declined to produce the documents specified in the second paragraph on the grounds that they were
protected from disclosure by the attorney-client privilege and constituted the work product of attorneys prepared in
anticipation of litigation. On August 31, 1977, the United States filed a petition seeking enforcement of the summons
under 26 U.S.C. 7402 (b) and 7604 (a) in the United States District Court for the Western District of Michigan. That court
adopted the recommendation of a Magistrate who concluded that the summons should be enforced. Petitioners
appealed to the Court of Appeals for the Sixth Circuit which rejected the Magistrate's finding of a waiver of the attorneyclient privilege, 600 F.2d 1223, 1227, n. 12, but agreed that the privilege did not apply "[t]o the extent that the
communications were made by officers and agents not responsible for directing Upjohn's actions in response to legal
advice . . . for the simple reason that the communications were not the `client's.'" Id., at 1225. The court reasoned that
accepting petitioners' claim for a broader application of the privilege would encourage upper-echelon management to
ignore unpleasant facts and create too broad a "zone of silence." Noting that Upjohn's counsel had interviewed officials
such as the Chairman and President, the Court of Appeals remanded to the District Court so that a determination of who
was [449 U.S. 383, 389] within the "control group" could be made. In a concluding footnote the court stated that the
work-product doctrine "is not applicable to administrative summonses issued under 26 U.S.C. 7602." Id., at 1228, n. 13.
II
Federal Rule of Evidence 501 provides that "the privilege of a witness . . . shall be governed by the principles of the
common law as they may be interpreted by the courts of the United States in light of reason and experience." The
attorney-client privilege is the oldest of the privileges for confidential communications known to the common law. 8 J.
Wigmore, Evidence 2290 (McNaughton rev. 1961). Its purpose is to encourage full and frank communication between
attorneys and their clients and thereby promote broader public interests in the observance of law and administration of
justice. The privilege recognizes that sound legal advice or advocacy serves public ends and that such advice or
advocacy depends upon the lawyer's being fully informed by the client. As we stated last Term in Trammel v. United
States, 445 U.S. 40, 51 (1980): "The lawyer-client privilege rests on the need for the advocate and counselor to know all
that relates to the client's reasons for seeking representation if the professional mission is to be carried out." And in
Fisher v. United States, 425 U.S. 391, 403(1976), we recognized the purpose of the privilege to be "to encourage clients
to make full disclosure to their attorneys." This rationale for the privilege has long been recognized by the Court, see
Hunt v. Blackburn, 128 U.S. 464, 470 (1888) (privilege "is founded upon the necessity, in the interest and administration
of justice, of the aid of persons having knowledge of the law and skilled in its practice, which assistance can only be
65 | P a g e

safely and readily availed of when free from the consequences or the apprehension of disclosure"). Admittedly
complications in the application of the privilege arise when the client is a corporation, which in theory is an artificial
creature of the [449 U.S. 383, 390] law, and not an individual; but this Court has assumed that the privilege applies
when the client is a corporation, United States v. Louisville & Nashville R. Co., 236 U.S. 318, 336 (1915), and the
Government does not contest the general proposition.
The Court of Appeals, however, considered the application of the privilege in the corporate context to present a
"different problem," since the client was an inanimate entity and "only the senior management, guiding and integrating
the several operations, . . . can be said to possess an identity analogous to the corporation as a whole." 600 F.2d, at
1226. The first case to articulate the so-called "control group test" adopted by the court below, Philadelphia v.
Westinghouse Electric Corp., 210 F. Supp. 483, 485 (ED Pa.), petition for mandamus and prohibition denied sub nom.
General Electric Co. v. Kirkpatrick, 312 F.2d 742 (CA3 1962), cert. denied, 372 U.S. 943 (1963), reflected a similar
conceptual approach:
"Keeping in mind that the question is, Is it the corporation which is seeking the lawyer's advice when the asserted
privileged communication is made?, the most satisfactory solution, I think, is that if the employee making the
communication, of whatever rank he may be, is in a position to control or even to take a substantial part in a decision
about any action which the corporation may take upon the advice of the attorney, . . . then, in effect, he is (or
personifies) the corporation when he makes his disclosure to the lawyer and the privilege would apply." (Emphasis
supplied.)
Such a view, we think, overlooks the fact that the privilege exists to protect not only the giving of professional advice to
those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.
See Trammel, supra, at 51; Fisher, supra, at 403. The first step in the resolution of any legal problem is ascertaining the
factual background and sifting through the facts [449 U.S. 383, 391] with an eye to the legally relevant. See ABA Code
of Professional Responsibility, Ethical Consideration 4-1:
"A lawyer should be fully informed of all the facts of the matter he is handling in order for his client to obtain the full
advantage of our legal system. It is for the lawyer in the exercise of his independent professional judgment to separate
the relevant and important from the irrelevant and unimportant. The observance of the ethical obligation of a lawyer to
hold inviolate the confidences and secrets of his client not only facilitates the full development of facts essential to
proper representation of the client but also encourages laymen to seek early legal assistance."
See also Hickman v. Taylor, 329 U.S. 495, 511 (1947).
In the case of the individual client the provider of information and the person who acts on the lawyer's advice are one
and the same. In the corporate context, however, it will frequently be employees beyond the control group as defined by
the court below - "officers and agents . . . responsible for directing [the company's] actions in response to legal advice" who will possess the information needed by the corporation's lawyers. Middle-level - and indeed lower-level - employees
can, by actions within the scope of their employment, embroil the corporation in serious legal difficulties, and it is only
natural that these employees would have the relevant information needed by corporate counsel if he is adequately to
advise the client with respect to such actual or potential difficulties. This fact was noted in Diversified Industries, Inc. v.
Meredith, 572 F.2d 596 (CA8 1978) (en banc):
"In a corporation, it may be necessary to glean information relevant to a legal problem from middle management or nonmanagement personnel as well as from top executives. The attorney dealing with a complex legal problem `is thus
faced with a "Hobson's choice". If he interviews employees not having "the very highest authority", [449 U.S. 383,
392] their communications to him will not be privileged. If, on the other hand, he interviews only those employees with
"the very highest authority", he may find it extremely difficult, if not impossible, to determine what happened." Id., at 608609 (quoting Weinschel, Corporate Employee Interviews and the Attorney-Client Privilege, 12 B. C. Ind. & Com. L. Rev.
873, 876 (1971)).
The control group test adopted by the court below thus frustrates the very purpose of the privilege by discouraging the
communication of relevant information by employees of the client to attorneys seeking to render legal advice to the
client corporation. The attorney's advice will also frequently be more significant to noncontrol group members than to
those who officially sanction the advice, and the control group test makes it more difficult to convey full and frank legal
advice to the employees who will put into effect the client corporation's policy. See, e. g., Duplan Corp. v. Deering
Milliken, Inc., 397 F. Supp. 1146, 1164 (SC 1974) ("After the lawyer forms his or her opinion, it is of no immediate benefit
to the Chairman of the Board or the President. It must be given to the corporate personnel who will apply it").

The narrow scope given the attorney-client privilege by the court below not only makes it difficult for corporate attorneys
to formulate sound advice when their client is faced with a specific legal problem but also threatens to limit the valuable
efforts of corporate counsel to ensure their client's compliance with the law. In light of the vast and complicated array of
regulatory legislation confronting the modern corporation, corporations, unlike most individuals, "constantly go to
lawyers to find out how to obey the law," Burnham, The Attorney-Client Privilege in the Corporate Arena, 24 Bus. Law.
901, 913 (1969), particularly since compliance with the law in this area is hardly an instinctive matter, see, e. g., United
States v. United States Gypsum Co., 438 U.S. 422, 440-441 (1978) ("the behavior proscribed by the [Sherman] Act
is [449 U.S. 383, 393] often difficult to distinguish from the gray zone of socially acceptable and economically justifiable
business conduct"). 2 The test adopted by the court below is difficult to apply in practice, though no abstractly
formulated and unvarying "test" will necessarily enable courts to decide questions such as this with mathematical
precision. But if the purpose of the attorney-client privilege is to be served, the attorney and client must be able to
predict with some degree of certainty whether particular discussions will be protected. An uncertain privilege, or one
which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all.
The very terms of the test adopted by the court below suggest the unpredictability of its application. The test restricts the
availability of the privilege to those officers who play a "substantial role" in deciding and directing a corporation's legal
response. Disparate decisions in cases applying this test illustrate its unpredictability. Compare, e. g., Hogan v. Zletz, 43
F. R. D. 308, 315-316 (ND Okla. 1967), aff'd in part sub nom. Natta v. Hogan, 392 F.2d 686 (CA10 1968) (control group
includes managers and assistant managers of patent division and research and development department), with
Congoleum Industries, Inc. v. GAF Corp., 49 F. R. D. 82, 83-85 (ED Pa. 1969), aff'd, 478 F.2d 1398 (CA3 1973) (control
group includes only division and corporate vice presidents, and not two directors of research and vice president for
production and research). [449 U.S. 383, 394]
The communications at issue were made by Upjohn employees 3 to counsel for Upjohn acting as such, at the direction
of corporate superiors in order to secure legal advice from counsel. As the Magistrate found, "Mr. Thomas consulted
with the Chairman of the Board and outside counsel and thereafter conducted a factual investigation to determine the
nature and extent of the questionable payments and to be in a position to give legal advice to the company with respect
to the payments." (Emphasis supplied.) 78-1 USTC 9277, pp. 83,598, 83,599. Information, not available from upperechelon management, was needed to supply a basis for legal advice concerning compliance with securities and tax
laws, foreign laws, currency regulations, duties to shareholders, and potential litigation in each of these areas. 4 The
communications concerned matters within the scope of the employees' corporate duties, and the employees themselves
were sufficiently aware that they were being questioned in order that the corporation could obtain legal advice. The
questionnaire identified Thomas as "the company's General Counsel" and referred in its opening sentence to the
possible illegality of payments such as the ones on which information was sought. App. 40a. A statement of policy
accompanying the questionnaire clearly indicated the legal implications of the investigation. The policy statement was
issued "in order that there be no uncertainty in the future as to the policy with respect to the practices which are the
subject of this investigation." [449 U.S. 383, 395] It began "Upjohn will comply with all laws and regulations," and
stated that commissions or payments "will not be used as a subterfuge for bribes or illegal payments" and that all
payments must be "proper and legal." Any future agreements with foreign distributors or agents were to be approved "by
a company attorney" and any questions concerning the policy were to be referred "to the company's General Counsel."
Id., at 165a-166a. This statement was issued to Upjohn employees worldwide, so that even those interviewees not
receiving a questionnaire were aware of the legal implications of the interviews. Pursuant to explicit instructions from the
Chairman of the Board, the communications were considered "highly confidential" when made, id., at 39a, 43a, and
have been kept confidential by the company.5 Consistent with the underlying purposes of the attorney-client privilege,
these communications must be protected against compelled disclosure.
The Court of Appeals declined to extend the attorney-client privilege beyond the limits of the control group test for fear
that doing so would entail severe burdens on discovery and create a broad "zone of silence" over corporate affairs.
Application of the attorney-client privilege to communications such as those involved here, however, puts the adversary
in no worse position than if the communications had never taken place. The privilege only protects disclosure of
communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney:
"[T]he protection of the privilege extends only to communications and not to facts. A fact is one thing and a
communication concerning that fact is an entirely different [449 U.S. 383, 396] thing. The client cannot be compelled to
answer the question, `What did you say or write to the attorney?' but may not refuse to disclose any relevant fact within
66 | P a g e

his knowledge merely because he incorporated a statement of such fact into his communications to his attorney."
Philadelphia v. Westinghouse Electric Corp., 205 F. Supp. 830, 831 (ED Pa. 1962).
See also Diversified Industries, 572 F.2d, at 611; State ex rel. Dudek v. Circuit Court, 34 Wis. 2d 559, 580, 150 N. W. 2d
387, 399 (1967) ("the courts have noted that a party cannot conceal a fact merely by revealing it to his lawyer"). Here
the Government was free to question the employees who communicated with Thomas and outside counsel. Upjohn has
provided the IRS with a list of such employees, and the IRS has already interviewed some 25 of them. While it would
probably be more convenient for the Government to secure the results of petitioner's internal investigation by simply
subpoenaing the questionnaires and notes taken by petitioner's attorneys, such considerations of convenience do not
overcome the policies served by the attorney-client privilege. As Justice Jackson noted in his concurring opinion in
Hickman v. Taylor, 329 U.S., at 516 : "Discovery was hardly intended to enable a learned profession to perform its
functions . . . on wits borrowed from the adversary."
Needless to say, we decide only the case before us, and do not undertake to draft a set of rules which should govern
challenges to investigatory subpoenas. Any such approach would violate the spirit of Federal Rule of Evidence 501. See
S. Rep. No. 93-1277, p. 13 (1974) ("the recognition of a privilege based on a confidential relationship . . . should be
determined on a case-by-case basis"); Trammel, 445 U.S., at 47 ; United States v. Gillock, 445 U.S. 360, 367 (1980).
While such a "case-by-case" basis may to some slight extent undermine desirable certainty in the boundaries of the
attorney-client [449 U.S. 383, 397] privilege, it obeys the spirit of the Rules. At the same time we conclude that the
narrow "control group test" sanctioned by the Court of Appeals in this case cannot, consistent with "the principles of the
common law as . . . interpreted . . . in the light of reason and experience," Fed. Rule Evid. 501, govern the development
of the law in this area.
III
Our decision that the communications by Upjohn employees to counsel are covered by the attorney-client privilege
disposes of the case so far as the responses to the questionnaires and any notes reflecting responses to interview
questions are concerned. The summons reaches further, however, and Thomas has testified that his notes and
memoranda of interviews go beyond recording responses to his questions. App. 27a-28a, 91a-93a. To the extent that
the material subject to the summons is not protected by the attorney-client privilege as disclosing communications
between an employee and counsel, we must reach the ruling by the Court of Appeals that the work-product doctrine
does not apply to summonses issued under 26 U.S.C. 7602. 6
The Government concedes, wisely, that the Court of Appeals erred and that the work-product doctrine does apply to IRS
summonses. Brief for Respondents 16, 48. This doctrine was announced by the Court over 30 years ago in Hickman v.
Taylor, 329 U.S. 495 (1947). In that case the Court rejected "an attempt, without purported necessity or justification, to
secure written statements, private memoranda and personal recollections prepared or formed by an adverse party's
counsel in the course of his legal duties." Id., at 510. The Court noted that "it is essential that a lawyer work with [449
U.S. 383, 398] a certain degree of privacy" and reasoned that if discovery of the material sought were permitted
"much of what is now put down in writing would remain unwritten. An attorney's thoughts, heretofore inviolate, would not
be his own. Inefficiency, unfairness and sharp practices would inevitably develop in the giving of legal advice and in the
preparation of cases for trial. The effect on the legal profession would be demoralizing. And the interests of the clients
and the cause of justice would be poorly served." Id., at 511.
The "strong public policy" underlying the work-product doctrine was reaffirmed recently in United States v. Nobles, 422
U.S. 225, 236 -240 (1975), and has been substantially incorporated in Federal Rule of Civil Procedure 26 (b) (3). 7
As we stated last Term, the obligation imposed by a tax summons remains "subject to the traditional privileges and
limitations." United States v. Euge, 444 U.S. 707, 714 (1980). Nothing in the language of the IRS summons provisions
or their legislative history suggests an intent on the part of Congress to preclude application of the work-product
doctrine. Rule 26 (b) (3) codifies the work-product doctrine, and the Federal Rules of Civil Procedure are made
applicable [449 U.S. 383, 399] to summons enforcement proceedings by Rule 81 (a) (3). See Donaldson v. United
States, 400 U.S. 517, 528 (1971). While conceding the applicability of the work-product doctrine, the Government
asserts that it has made a sufficient showing of necessity to overcome its protections. The Magistrate apparently so
found, 78-1 USTC 9277, p. 83,605. The Government relies on the following language in Hickman:
"We do not mean to say that all written materials obtained or prepared by an adversary's counsel with an eye toward
litigation are necessarily free from discovery in all cases. Where relevant and nonprivileged facts remain hidden in an

attorney's file and where production of those facts is essential to the preparation of one's case, discovery may properly
be had. . . . And production might be justified where the witnesses are no longer available or can be reached only with
difficulty." 329 U.S., at 511 .
The Government stresses that interviewees are scattered across the globe and that Upjohn has forbidden its employees
to answer questions it considers irrelevant. The above-quoted language from Hickman, however, did not apply to "oral
statements made by witnesses . . . whether presently in the form of [the attorney's] mental impressions or memoranda."
Id., at 512. As to such material the Court did "not believe that any showing of necessity can be made under the
circumstances of this case so as to justify production. . . . If there should be a rare situation justifying production of these
matters, petitioner's case is not of that type." Id., at 512-513. See also Nobles, supra, at 252-253 (WHITE, J.,
concurring). Forcing an attorney to disclose notes and memoranda of witnesses' oral statements is particularly
disfavored because it tends to reveal the attorney's mental processes, 329 U.S., at 513 ("what he saw fit to write down
regarding witnesses' remarks"); id., at 516-517 ("the statement would be his [the [449 U.S. 383, 400] attorney's]
language, permeated with his inferences") (Jackson, J., concurring). 8
Rule 26 accords special protection to work product revealing the attorney's mental processes. The Rule permits
disclosure of documents and tangible things constituting attorney work product upon a showing of substantial need and
inability to obtain the equivalent without undue hardship. This was the standard applied by the Magistrate, 78-1 USTC
9277, p. 83,604. Rule 26 goes on, however, to state that "[i]n ordering discovery of such materials when the required
showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions or
legal theories of an attorney or other representative of a party concerning the litigation." Although this language does not
specifically refer to memoranda based on oral statements of witnesses, the Hickman court stressed the danger that
compelled disclosure of such memoranda would reveal the attorney's mental processes. It is clear that this is the sort of
material the draftsmen of the Rule had in mind as deserving special protection. See Notes of Advisory Committee on
1970 Amendment to Rules, 28 U.S.C. App., p. 442 ("The subdivision . . . goes on to protect against disclosure the
mental impressions, conclusions, opinions, or legal theories . . . of an attorney or other representative of a party. The
Hickman opinion drew special attention to the need for protecting an attorney against discovery of memoranda prepared
from recollection of oral interviews. The courts have steadfastly safeguarded against disclosure of lawyers' mental
impressions and legal theories . . ."). [449 U.S. 383, 401]
Based on the foregoing, some courts have concluded that no showing of necessity can overcome protection of work
product which is based on oral statements from witnesses. See, e. g., In re Grand Jury Proceedings, 473 F.2d 840, 848
(CA8 1973) (personal recollections, notes, and memoranda pertaining to conversation with witnesses); In re Grand Jury
Investigation, 412 F. Supp. 943, 949 (ED Pa. 1976) (notes of conversation with witness "are so much a product of the
lawyer's thinking and so little probative of the witness's actual words that they are absolutely protected from disclosure").
Those courts declining to adopt an absolute rule have nonetheless recognized that such material is entitled to special
protection. See, e. g., In re Grand Jury Investigation, 599 F.2d 1224, 1231 (CA3 1979) ("special considerations . . . must
shape any ruling on the discoverability of interview memoranda . . .; such documents will be discoverable only in a `rare
situation'"); cf. In re Grand Jury Subpoena, 599 F.2d 504, 511-512 (CA2 1979).
We do not decide the issue at this time. It is clear that the Magistrate applied the wrong standard when he concluded
that the Government had made a sufficient showing of necessity to overcome the protections of the work-product
doctrine. The Magistrate applied the "substantial need" and "without undue hardship" standard articulated in the first
part of Rule 26 (b) (3). The notes and memoranda sought by the Government here, however, are work product based on
oral statements. If they reveal communications, they are, in this case, protected by the attorney-client privilege. To the
extent they do not reveal communications, they reveal the attorneys' mental processes in evaluating the
communications. As Rule 26 and Hickman make clear, such work product cannot be disclosed simply on a showing of
substantial need and inability to obtain the equivalent without undue hardship.
While we are not prepared at this juncture to say that such material is always protected by the work-product rule,
we [449 U.S. 383, 402] think a far stronger showing of necessity and unavailability by other means than was made by
the Government or applied by the Magistrate in this case would be necessary to compel disclosure. Since the Court of
Appeals thought that the work-product protection was never applicable in an enforcement proceeding such as this, and
since the Magistrate whose recommendations the District Court adopted applied too lenient a standard of protection, we
think the best procedure with respect to this aspect of the case would be to reverse the judgment of the Court of
67 | P a g e

Appeals for the Sixth Circuit and remand the case to it for such further proceedings in connection with the work-product
claim as are consistent with this opinion.
Accordingly, the judgment of the Court of Appeals is reversed, and the case remanded for further proceedings.
It is so ordered.

In Re Grand Jury Investigation No. 83-2-35, 723 F.2d 447 (6th Cir. 1983)
Attorney Richard Durant (Durant) appeals a finding of contempt for failure to disclose to the grand jury upon order of
court the identity of his client. On March 1, 1983, Special Agent Edwards (Edwards), of the Federal Bureau of
Investigation (FBI), visited Durant's office and explained that the FBI was investigating the theft of numerous checks
made payable to International Business Machines, Inc. (IBM). He advised that a number of the stolen checks had been
traced and deposited into various banking accounts under names of non-existent organizations, at least one of which
included the initials "IBM". Edwards produced a photostatic copy of a check drawn upon one of these ficticious accounts
which check was made payable to Durant's law firm. Upon FBI inquiry, Durant conceded that this check for $15,000 had
been received and endorsed by his firm for services rendered to a client in two cases, one of which was "finished" and
the other of which was "open". Durant refused to disclose the identity of his client to whose credit the proceeds had
been applied, asserting the attorney-client privilege.
2
Durant was subpoenaed to appear before the grand jury the following day, March 2, 1983, where he again refused to
identify his client, asserting the attorney-client privilege. The government immediately moved the United States District
Court for the Eastern District of Michigan for an Order requiring Durant to provide the requested information. At a
hearing that same afternoon, Durant informed the court that disclosure of his client's identity could incriminate that client
in criminal activity so as to justify invoking the attorney-client privilege. Citing to the court: In re Grand Jury Appearance
(Michaelson), 511 F.2d 882 (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 (9th Cir.1960). Durant additionally stated that "I do not know any of the facts about this theft or
anything else", and suggested that the requested information should be obtained through other methods. 1 The court
adjudged that the privilege did not attach and ordered Durant to identify his client. Upon refusal to comply with this
Order, Durant was held in contempt. Further proceedings (e.g. bond) were stayed until March 16, 1983, and
subsequently stayed until March 22, 1983.
3
In an obvious attempt to ascertain the identity of Durant's client in an alternate manner, the United States issued a
second subpoena to Durant on March 9, 1983, ordering him to appear before the grand jury on March 16, 1983, and
produce the following documents:
4
A listing of all clients of the law firm of Durant & Durant, P.C., and Richard Durant as of February 18, 1983 including all
clients with active cases and clients who owe fees or have provided a retainer to the firm and all client ledger cards and
other books, records and documents reflecting or recording payments to the law firm for the period February 1, 1983 to
March 1, 1983.
5
Durant moved to quash this subpoena duces tecum, again asserting the attorney-client privilege. At the March 22, 1983
hearing on this motion, Durant re-asserted that production of the subpoenaed documents could implicate his client in
criminal activity. He additionally observed that the FBI had admitted before Durant and the district court judge inchambers that an arrest would be effected by the FBI immediately following disclosure.2 In effect, the identity of Durant's
client was the last link of evidence necessary to effect an indictment. The Court was advised for the first time by Durant
that on March 2, 1983 the FBI requested, under threat of harassment, that Durant "breach" the attorney-client privilege
and identify his client without informing the client.3
6

MR. DURANT: Yes, Your Honor, I do.

9
COURT: Other than--in what way do you contend that it would?
10
MR. DURANT: Sir, I'm in a catch-22 position again. I can't tell you. If I tell you, I have explained things that my client
obviously doesn't wish to be disclosed.
11
COURT: All right.
12
Durant failed to move the court for an ex parte in camera submission of evidence or testimony to establish that his client
had indeed sought legal advice relating to past criminal activity involving theft of IBM checks. Nor did the district court,
sua sponte, suggest an ex parte in camera submission of evidence to probe Durant's blanket statements.
13
The United States then introduced the check into evidence in support of the proposition that it was improbable that
Durant's client had engaged Durant's services to defend against impending charges of theft. A notation on the lower left
hand corner of the check stated "corporate legal services". The United States observed "That doesn't say anything
about crimes committed or to be committed or legal services in connection with criminal matters. It is 'corporate legal
services'; no suggestion of any criminal investigation." It was additionally noted by the government that the FBI had not
initiated the investigation nor had it been informed of the theft of the IBM checks until March 1st, approximately two
weeks after the check had been received by Durant. Durant offered the following rebuttal:
14
I don't know when IBM knew it (i.e. knew that checks had been stolen), but Mr. Edwards, when he appeared at my
office, told me that it did involve checks from IBM, and I said that on March 2nd, when I appeared here.
15
I think the mere fact that the check says for "corporate legal services" when it has been admitted by the U.S. Attorney
that such a corporation doesn't even exist, it is a fictional entity, doesn't deny what I am representing to the Court.
16
The district court, opining that the issues joined in the first and second subpoenaes served upon Durant were
"essentially the same", withheld a decision of Durant's motion to quash the second subpoena duces tecum pending
appellate resolution of the court's contempt Order of March 2, 1983.
17

The Court was informed that disclosure of the requested information would not only implicate Durant's client in criminal
activity, but it would implicate that client in the very criminal activity for which legal advice had been sought.
7

Confronting the applicability of the attorney-client privilege as urged by Durant, it is initially observed that the privilege is
recognized in the federal forum. See: Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1975); Rule
501, Federal Rules of Evidence. The burden of establishing the existence of the privilege rests with the person asserting
it. See: In re Walsh, 623 F.2d 489, 493 (7th Cir.), cert. denied, 449 U.S. 994, 101 S.Ct. 531, 66 L.Ed.2d 291 (1980); Liew
v. Breen, 640 F.2d 1046, 1049 (9th Cir.1981); United States v. Stern, 511 F.2d 1364, 1367 (2nd Cir.1975); United States
v. Landof, 591 F.2d 36, 38 (9th Cir.1978); In re Grand Jury Empanelled February 14, 1978 (Markowitz), 603 F.2d 469,
474 (3d Cir.1979); United States v. Hodgson, 492 F.2d 1175 (10th Cir.1974); United States v. Tratner, 511 F.2d 248, 251
(7th Cir.1975); United States v. Demauro, 581 F.2d 50, 55 (2d Cir.1978); United States v. Ponder, 475 F.2d 37, 39 (5th
Cir.1973); United States v. Bartlett, 449 F.2d 700, 703 (8th Cir.1971), cert. denied, 405 U.S. 932, 92 S.Ct. 990, 30
L.Ed.2d 808 (1972). The attorney-client privilege exists
18

COURT: Do you contend and do you submit that the disclosure of the information which is sought by this subpoena,
quote, would implicate your client in the very criminal activity for which legal advice was sought?
8

to protect confidential communications between a lawyer and his client in matters that relate to the legal interests of
society and the client.
19

68 | P a g e

In re Grand Jury Proceedings (Fine), 641 F.2d 199, 203 (5th Cir.1981). Accord: In re Grand Jury Subpoena (Slaughter),
694 F.2d 1258, 1260 (11th Cir.1982); United States v. Hodge and Zweig, 548 F.2d 1347, 1353 (9th Cir.1977); 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). The policy behind protecting confidential communications is self-evident:
20
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.
21
Hodge & Zweig, supra, 548 F.2d at 1353, citing 8 J. Wigmore, Evidence, Sec. 2291 at 545 (McNaughton Rev.Ed.1961).
Accord Fisher, supra, 425 U.S. at 403, 96 S.Ct. at 1577 ("The purpose of the privilege is to encourage clients to make
full disclosure to their attorneys").4 See also: United States v. Goldfarb, 328 F.2d 280 (6th Cir.) cert. denied, 377 U.S.
976, 84 S.Ct. 1883, 12 L.Ed.2d 746 (1964).
22
Since the attorney-client privilege may serve as a mechanism to frustrate the investigative or fact-finding process, it
creates an inherent tension with society's need for full and complete disclosure of all relevant evidence during
implementation of the judicial process. See: In re Grand Jury Proceedings (Jones), 517 F.2d 666, 671-72, (5th Cir.1975)
("the purpose of the privilege--to suppress truth--runs counter to the dominant aims of law"). In particular, invocation of
the privilege before the grand jury may jeopardize an effective and comprehensive investigation into alleged violations
of the law, and thereby thwart that body's dual functions of determining "if there is probable cause to believe that a crime
has been committed and of protecting citizens against unfounded criminal prosecutions." Branzburg v. Hayes, 408 U.S.
665, 686-87, 92 S.Ct. 2646, 2659, 33 L.Ed.2d 626 (1972).5 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." In re Walsh, supra, 623 F.2d at 492.
Accord: Fisher, supra, 425 U.S. at 403, 96 S.Ct. at 1577 ("it applies only where necessary to achieve its purpose.") As a
derogation of the search for truth, the privilege is to be narrowly construed. See: United States v. Weger, 709 F.2d 1151,
1154 (7th Cir.1983); Baird v. Koerner, 279 F.2d 623, 631-32 (9th Cir.1960); United States v. Pipkins, 528 F.2d 559, 56263 (5th Cir.1976).
23
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), 641 F.2d 199, 204 (5th Cir.1981); Frank v. Tomlinson, 351 F.2d 384 (5th Cir.1965), cert.
denied, 382 U.S. 1028, 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).6
24
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 623 (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 asserting 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:
25

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 acknowledgement of guilt on the part of such client of the
very offenses on account of which the attorney was employed.
26
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:
27
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.
28
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.
29
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 Duces 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).
30
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:
31
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 other factors.
32
Id., 279 F.2d at 632. Citing Baird, the Fourth Circuit promulgated the following exception:
33
To the general rule is an exception, firmly bedded 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.
34
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

69 | P a g e

(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:
35
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.
36
United States v. 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.
37
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),7 is recognized when disclosure of the identity of the client would provide the "last link" of
evidence:
38
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.
39
Id. at 1027.8 Upon careful consideration this Court concludes that, although language exists in Baird to support viability
of Pavlick's "last link" exception,9 the exception is simply not grounded upon the preservation of confidential
communications and hence not justifiable to support the attorney-client privilege. Although the last link exception may
promote concepts of fundamental fairness against self-incrimination, these concepts are not proper considerations to
invoke the attorney-client privilege. Rather, the focus of the inquiry is whether disclosure of the identity would adversely
implicate the confidentiality of communications. Accordingly, this Court rejects the last link exception as articulated in
Pavlick.
40
Turning to the facts at bar, it is observed that Durant asserted three justifications for invocation of the attorney-client
privilege. First, at the March 2 hearing, he stated that disclosure might possibly implicate the client in criminal activity. As
this justification has no roots in concepts of confidentiality or communication, it cannot be advanced to support an
abdication of the general rule that identity of a client is not privileged. Second, at the March 22 hearing, Durant informed
the Court that the FBI had informed him that an arrest would be effected upon disclosure of the identity of Durant's
client. This is simply an assertion that disclosure would provide the last link of evidence to support an indictment as
articulated in Pavlick --a precedent which is herein rejected.
41
Third, at the March 22 hearing, Durant submitted that disclosure was justified under the "legal advice" exception
embraced by the Ninth Circuit. Seeking to invoke this exception, it was incumbent upon Durant to "show that a strong
possibility exist[ed] that disclosure of the information would implicate the client in the very matter for which legal advice
[had been] sought in the first case". In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), supra, 695 F.2d at
365 (emphasis added). 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
70 | P a g e

camera ex parte hearing. See: In re Grand Jury Witness (Salas), supra, 695 F.2d at 362; (proper procedure to establish
existence of "legal advice" exception was to make an in camera showing); In re Grand Jury Empanelled February 14,
1978 (Markowitz), supra, 603 F.2d at 474 (referring to procedure to be employed by an attorney who asserts Fifth
Amendment privilege); In re Grand Jury Subpoena (Slaughter), supra, 694 F.2d at 1260 n. 2 (United States requested in
its subpoena that any averred privileged matters be deleted and the original copy retained intact for possible in camera
inspection by the district court); In re Walsh, supra, 623 F.2d at 494 n. 5; United States v. Tratner, supra, 511 F.2d at
252.
42
Since the burden of establishing the existence of the privilege rests with the party asserting the privilege, it is incumbent
upon the attorney to move for an in camera ex parte hearing if one is desired. In the action sub judice, Durant failed to
so move. Rather, he rested on his blanket assertion that his client had initially sought legal advice relating to matters
involving the theft of IBM checks. Such unsupported assertions of privilege are strongly disfavored. See: United States
v. Cromer, 483 F.2d 99, 102 (9th Cir.1973); United States v. Davis, 636 F.2d 1028, 1044 n. 20 (5th Cir.1981); In re Grand
Jury Witness (Salas), supra, 695 F.2d at 362. Further, it is pertinent to observe that at the first hearing on March 2
Durant had expressly disavowed knowledge of the existence of stolen IBM checks. This statement significantly
diminishes the credibility of Durant's subsequent March 22 representation that his client had indeed engaged Durant's
services for past activity relating to stolen IBM checks. Accordingly, Durant clearly failed to satisfy his burden of
demonstrating a "strong possibility" that disclosure of the identity of his client would implicate that client in the very
manner for which legal advice had been initially sought.
43
Last, it is observed that Durant did not represent to the district court that disclosure of the identity of his client would
amount to a disclosure of a confidential communication. See: NLRB v. Harvey, supra; United States v. Jeffers, supra.
Not having advanced this exception to the general rule, it follows axiomatically that Durant failed to satisfy the burden of
establishing its existence. Nor does the record suggest the viability of this exception so as to justify a remand.
44
In sum, Durant has failed to establish the existence of any exception to the general rule that disclosure of the identity of
a client is not within the protective ambit of the attorney-client privilege. Therefore the contempt Order of the district
court issued against Durant is hereby AFFIRMED.

595 F.2d 1321 (1979)

UNITED STATES of America, Plaintiff-Appellee, v. Robert McPARTLIN et al., Defendant-Appellants.
United States Court of Appeals, Seventh Circuit.
As Amended on Denial of Rehearing and Rehearing April 23, 1979.
Edward J. Calihan, Jr., William J. Harte, Chicago, Ill., Herbert J. Miller, Jr., Washington, D. C., Joseph A. Lamendella,
Harvey M. Silets, John J. Jiganti, Chicago, Ill., for defendants-appellants.
Gordon B. Nash, Joan B. Safford, Candace J. Fabri, Asst. U. S. Attys., Chicago, Ill., for plaintiff-appellee.

The Sanitary District is a municipal corporation with primary responsibility for disposing of sewage from Chicago and
surrounding areas. The District's business is governed by an elected Board of Trustees3 and managed by a
professional staff, which from time to time makes recommendations to the Board concerning major undertakings of the
District.
The Sanitary District operates a sewage treatment plant in Stickney, Illinois. Until 1971 the sludge produced as a byproduct was disposed of by pumping it into nearby lagoons. Early that year, because the lagoons were rapidly being
filled and efforts to clean them had failed, the District announced plans to have the sludge transported to Fulton County,
Illinois, about 160 miles southwest of Stickney, and solicited bids on the project, which were due on March 19, 1971.
Viewed in the light most favorable to the prosecution, the evidence showed that Benton, acting with the knowledge and
complicity of Frederick Ingram and through intermediaries Bull and Weber, bribed McPartlin and Janicki to cause the
sludge-hauling contract to be awarded to Ingram Corporation and one of its subsidiaries, and later bribed the same
officials to secure favorable treatment under the contract and modifications of the contract. The details were as follows:

Before PELL, SPRECHER and TONE, Circuit Judges.

As Amended on Denial of Rehearing and Rehearing En Banc April 23, 1979.
TONE, Circuit Judge.
The appellants were convicted, in a nine-week jury trial, of conspiring to violate the wire and travel fraud statutes and of
substantive violations of those statutes.
The indictment charged that defendant Frederick B. Ingram,1 chairman of the board of the Louisiana-based Ingram
Corporation, had paid defendant Robert F. McPartlin, an Illinois legislator, defendant Valentine Janicki, a trustee for the
Metropolitan Sanitary District, and others more than $900,000 to secure for the Ingram Corporation a multi-million dollar
sludge-hauling contract with the District. Defendants Franklin H. Weber, a businessman, and Edwin T. Bull, president of
a towing company, were alleged to be intermediaries through whom many of the payments were made. William J.
Benton, vice president of Ingram Corporation, was an unindicted co-conspirator who played a major role in the
conspiracy and testified as a witness for the prosecution. The defendants were convicted of numerous violations of the
Travel Act,

When the District solicited bids on the sludge-hauling project, defendant Bull assisted Frank Oberle, an employee of
Ingram Contractors, Inc., a wholly owned subsidiary of Ingram Corporation, in investigating the new proposal. During
the week before the bids were to be submitted, Bull visited Robert Howson, a vice president of Ingram Contractors, Inc.,
in New Orleans, Louisiana, and told Howson that if Ingram Corporation expected to secure the contract, it would have to
make a "political contribution." Howson responded that he was not in that sort of business, but then took Bull to meet
William J. Benton, vice president of Ingram Corporation and president of Ingram Contractors, Inc.
Ingram Corporation, Burlington Northern, Inc., and the Atchison, Topeka and Santa Fe Railway Company were the
leading contenders among those submitting bids on March 19, 1971. To negotiate with these three bidders, the Sanitary
District established a committee, which met with representatives of the bidders for the first time on March 23, 1971.
That evening Bull, Oberle, and Benton met in Benton's hotel room, where they were later joined by defendant Weber.
After Bull had introduced Weber to Benton, Bull and Oberle left the room. Weber then told Benton that if Ingram
Corporation wanted the sludge-hauling contract, it
[595 F.2d 1329]

[595 F.2d 1328]

would have to make a $250,000 "political contribution." Benton replied that he would have to get approval from his
superiors. After agreeing to meet Benton the next day, Weber left.

18 U.S.C. 1952, and the Wire, Radio, Television Fraud Act, 18 U.S.C. 1343, and of conspiring to violate those acts in
violation of 18 U.S.C. 371. The jury acquitted three other defendants, E. Bronson Ingram, brother of Frederick B.
Ingram and an officer of Ingram Corporation, Chester Majewski, a Metropolitan Sanitary District trustee, and Bart T.
Lynam, General Supervisor of the Sanitary District.2

Benton then telephoned defendant Frederick Ingram to inform him of Weber's "political contribution" proposal. Ingram
agreed, provided that the contribution could be added to the cost of the contract.

The defendants urge as grounds for reversal the district court's denial of motions for severance, a ruling on the alleged
withholding by the prosecution of evidence favorable to the defendants until the beginning of the trial, rulings admitting
and excluding evidence, certain instructions to the jury, and other alleged trial errors. In this portion of the opinion the
facts are stated and the issues arising from the denial of severance are decided. Judge Pell and Judge Sprecher have
written, and I concur in, the portions of the opinion dealing with the other issues.
THE FACTS

71 | P a g e

On March 24, 1971, Benton again met with Bull, who expressed his belief that if the Ingram Corporation accepted
Weber's proposal, it would get the contract. Bull also told Benton that if the corporation did get the contract, he wanted
$100,000 in addition to anything it paid Weber. At another meeting later in the day, Weber asked Benton to open an
account at a Chicago bank to demonstrate Ingram Corporation's "good faith." That same day, Benton opened an
account at the First National Bank of Chicago.
The following week, Weber called Benton and told him that Burlington Northern, Inc. had offered to make a $295,000
political contribution. According to Weber, it was therefore necessary for Ingram Corporation to raise its contribution to
$450,000, including a $150,000 cash payment before the contract was awarded. Again Benton consulted Frederick
Ingram, who again agreed on condition that the contribution could be added to the contract price. Benton communicated

Ingram Corporation's approval to Weber, but said that the corporation could not raise $150,000 in cash on such short
notice. Weber replied that some of the $150,000 had to be paid by April 3, 1971.

On June 26, 1971, Weber told Benton that Janicki needed $21,250 to pay off three District staff members. Ingram
issued a check for that amount to Southwest Expressway, another of Weber's defunct corporations.

On April 3, 1971, Weber and McPartlin went to Benton's Chicago hotel room, where Weber introduced McPartlin to
Benton as the man who handled all political contributions for the Democratic Party in Illinois. McPartlin assured Benton
that Ingram Corporation would receive at least $21,500,000 in total revenue from the sludge-hauling contract. Benton
gave McPartlin $75,000 in cash, including several one thousand dollar bills. On April 6, 1971, Weber deposited nine one
thousand dollar bills in the account of one of his defunct corporations, Illinois Southern Materials.

On July 27, 1971, Weber issued a $20,000 check to Bull Towing Company. Edwin Bull deposited the check and, at the
same time, withdrew $20,000. The next day, the Illinois Commerce Commission granted Ingram Corporation's request
for a certificate of convenience and necessity.

On April 6, 1971, Weber telephoned Benton, asking for $25,000 in cash immediately to secure the cooperation of three
Sanitary District staff members. When Benton protested that he could not deliver $25,000 cash on such short notice,
Weber suggested that Ingram Corporation issue a check in that amount to Bull Towing Company, which Benton caused
to be done the next day. On April 8, 1971, Edwin Bull deposited the Ingram check in the account of Bull Towing
Company and, at the same time, withdrew $25,000 in cash from the account.
The Sanitary District requested the three bidders on the sludge-hauling contract to submit new bids by April 15, 1971.
Santa Fe declined. Burlington Northern submitted a revised bid of $18,300,000. Oberle submitted Ingram Corporation's
revised bid of $16,990,000, after which he returned to his hotel room, where he received a telephone call from either
Benton or Weber. The caller instructed him to go to the bar at the Continental Plaza Hotel to meet defendant Janicki,
which Oberle did.4 At the meeting in the bar Janicki told Oberle to raise Ingram's revised bid to $17,990,000. Oberle
then returned to his hotel room and telephoned Benton for advise. Benton instructed Oberle to attend the Sanitary
District negotiating committee meeting scheduled for that afternoon. While attending the meeting, Oberle received
telephone instructions from Benton to raise the Ingram bid by $1,000,000 to $17,990,000. Oberle did so.
On April 22, 1971, the Sanitary District Board of Trustees voted to award the contract to Ingram Corporation. Between
that date and May 12, 1971, a contract was drafted by members of the Sanitary District staff and Ingram Corporation
representatives, including John Donnelly, president of Ingram Barge Company, the Ingram Corporation subsidiary that
would transport the sludge under the contract.
[595 F.2d 1330]
The staff insisted on a liquidated damages clause authorizing the District to prescribe the amount of sludge to be
transported in any 24-hour period and providing that Ingram Corporation would be assessed a penalty for each ton of
sludge not transported, as prescribed, in any 24-hour period. Donnelly, after initially refusing to agree to the provision,
discussed it with Benton, who told him to agree to it. Only after talking with Frederick Ingram, however, did Donnelly
accede to inclusion of the liquidated damages clause.
The contract provided that Ingram Corporation would construct additions to the treatment facilities at Stickney and an
unloading dock and pump station in Fulton County, for which work the Sanitary District was to pay $733,000. Ingram
Corporation was also to construct a pipeline over property not owned by the District, for which construction the District
agreed to pay $68,000 per month for 36 months, a total of $2,448,000. The contract also provided that Ingram
Corporation would receive $1.802 per ton of sludge hauled from Stickney to Fulton County. The parties estimated that
over the life of the contract 8,000,000 tons of sludge would be transported.
On May 19, 1971, Weber and Benton met in New Orleans to discuss ways of increasing Ingram Corporation's total
revenue under the contract to the $21,500,000 that McPartlin had assured Benton would be forthcoming. Weber told
Benton that Janicki and he thought that the corporation could receive an additional $2,100,000 by billing the Sanitary
District a second time for the construction of the pipeline and the construction in Fulton County.
72 | P a g e

On August 14, 1971, Edwin Bull negotiated two contracts with Ingram Corporation. In one of them Ingram Corporation
agreed to rent barges from Bull Towing Company to transport sludge from the Lemont Bridge over the Illinois River to
Fulton County. Donnelly signed this contract but refused to sign the other contract, under which Ingram Corporation
would agree to pay Bull $.17 per ton for transporting sludge from Stickney to the Lemont Bridge. Ten cents per ton were
intended as payment for actual towing services; the other seven cents per ton were intended as payment for consulting
services and engineering and feasibility studies that Bull had allegedly performed for Ingram Corporation. The second
contract also provided for payment to Bull of a $76,000 "finder's fee."5 Donnelly objected to the "finder's fee,"
questioned whether any consulting services or studies that Bull provided to Ingram Corporation were worth $560,000,
and questioned Bull's competence as a barge operator. Out of Bull's presence, Benton told Donnelly that if Bull did not
participate in the sludge-hauling contract, there would be no contract. Donnelly still refused to sign the second IngramBull contract, but permitted Benton to sign it on behalf of Ingram Barge Corporation as well as Ingram Corporation.
On August 15, 1971, Benton, Weber, and McPartlin met in Chicago to discuss further payments. Benton agreed to
provide $146,000 in two installments. On August 18, 1971, Oscar Hardison, comptroller of Ingram Corporation,
delivered $30,000 in cash to Weber at O'Hare Airport in Chicago. On August 28, 1971, another Ingram executive, G.
Glen Martin, gave Weber $116,000, which
[595 F.2d 1331]
consisted of $46,000 in cash and $70,000 in checks payable to Weber's defunct corporations.
Ingram Barge Corporation began transporting sludge six days later than the date it was required to do so under the
sludge-hauling contract; whereupon the Sanitary District assessed liquidated damages of $30,000 under the liquidated
damages clause. In early October, 1971, Benton, Weber, and Janicki held a meeting in Chicago to discuss this matter,
following which the Sanitary District withdrew the assessment. After the meeting, Weber told Benton that Janicki wanted
$100,000 by the end of 1971. When informed by Benton of this request, however, Frederick Ingram refused, saying that
no more payments would be made until the Sanitary District began making payments on the pipeline, as Weber had
promised it would.
On December 15, 1971, Weber telephoned Benton to tell him that the Sanitary District would issue a check to Ingram
Corporation for $1,000,000, as partial payment on the pipeline. When Benton arrived at Janicki's office the following
day, however, Janicki disclaimed any knowledge of the $1,000,000 check. Benton threatened to "jerk the rug" from
under everyone in Chicago.
Upon learning of Benton's threat, Weber informed Oberle of it and asked Oberle to do whatever he could about Benton.
Oberle telephoned defendant Frederick Ingram to tell him of Benton's threat. Ingram expressed no surprise, simply
thanked Oberle for the information and hung up, and later in the day met with Benton to discuss the matter. At the
meeting they agreed that Benton would continue to represent Ingram's interest in dealing with the Chicago officials.

On December 21, 1971, Weber, Janicki, and Benton met in Benton's hotel room in Chicago. Benton apologized for his
threat. He then gave Weber two checks payable to Weber's defunct corporations in the amount of $50,070. This
payment brought Ingram's total contribution to $317,320, leaving a balance of $132,680 on the $450,000 commitment.
In February, 1972, Weber told Benton that because of the difficulties in getting the Sanitary District to pay the additional
$2,100,000 for the pipeline, Ingram Corporation would have to increase its contribution to $620,000. On February 17,
1972, Weber asked Benton for $100,000 in cash immediately. When Benton told defendant Ingram of the request,
Ingram responded that he would investigate ways of raising the money. On February 28, 1972, Benton delivered
$100,000 to Mrs. Valentine Janicki.
At trial, defendant Frederick Ingram contended that he did not learn until this February, 1972 meeting with Benton that
his company had secured a multi-million dollar contract by paying more than $300,000 to Chicago officials.6 Ingram
testified that he protested against paying the bribes, but reluctantly agreed when Benton informed him that if he refused
to pay, the Sanitary District would not pay the additional $2,100,000 for the pipeline and would use the liquidated
damages clause to penalize Ingram Corporation.
On March 10, 1972, Weber told Benton that if Ingram Corporation could deliver $100,000 before the end of the month,
the Sanitary District Board of Trustees would approve the purchase of the pipeline. One-fourth of this amount was
delivered, but the balance was not, and the trustees failed to approve the purchase. At a July 6, 1972 meeting between
Benton, Janicki, and Weber, however, Janicki promised that the trustees would take some action on the pipeline in the
month of July. As promised, the board of trustees authorized the staff to negotiate with Ingram for the purchase of the
pipeline on July 20, 1972.
On August 23, 1972, Benton gave McPartlin $80,000 in cash. McPartlin told Benton that the trustees would approve the
purchase
[595 F.2d 1332]
of the pipeline in September, but Ingram would have to pay the balance of its contribution, about $95,000, in September
also.
Between August and November, 1972, Ingram Corporation and the Chicago officials negotiated a new agreement.
Ingram would pay $750,000 over a three year period, and the Sanitary District would purchase the pipeline, modify the
liquidated damages clause, and extend the sludge-hauling contract for three years at a higher price per ton.
On December 28, 1972, representatives of the Ingram companies and the District signed an agreement covering the
pipeline purchase that was to be effective only if the parties also signed two other agreements: a retroactive
modification of the liquidated damages clause and a three year extension of the sludge-hauling contract. On January
26, 1973, the additional agreements were signed.
After the signing, Benton returned to his hotel room and telephoned Janicki to tell him that his money was ready. Janicki
sent his secretary to pick up a package containing $50,000 in cash. Benton then telephoned Weber to tell him to come
and pick up the balance of the money due. When Weber arrived, Benton gave him $95,000 in cash and nine letters of
credit drawn on a Swiss bank in the amount of $70,000 each.7
One of the letters of credit matured in June, 1973, and each of the others matured sequentially at six-month intervals.
Weber admitted negotiating the first four letters at the Swiss bank in July, 1973, December, 1973, June, 1974, and
December, 1974. On each occasion, he purchased his plane ticket to Europe with cash, arranged for his trip to
73 | P a g e

Switzerland only after he arrived in Europe, and stopped in Toronto, Canada, on the way back to the United States. On
his last two trips, Weber telephoned Janicki from Europe.
Sometime before the fall of 1974 a federal grand jury commenced an investigation of the events surrounding the sludgehauling contract. In May, 1975, the government granted immunity to Benton.
In November, 1975, Weber sent his brother, Henry Weber, to Europe to negotiate the fifth and sixth letters of credit,
which matured in June, 1975, and December, 1975.8 Following his brother's instructions, Henry Weber did not proceed
directly to the drawee Swiss bank but went to a bank in Vaduz, Liechtenstein, to have that bank present the letters to
the Swiss bank.
On November 26, 1975, two weeks after his return from Liechtenstein, Henry Weber appeared before the grand jury
and testified that he had only visited Frankfurt and Munich. On December 3, 1975, the government called Henry Weber
to appear a second time before the grand jury, this time asking Weber to bring his travel records. During his second
appearance, Henry Weber testified that he had been mistaken when he said that he had only visited Frankfurt and
Munich and that he had also visited Vaduz.
On December 9, 1975, Franklin Weber's attorney telephoned one of the government's attorneys in this case and
informed him of what the government attorney already had reason to suspect, namely, that Franklin Weber had
possession of the remaining letters of credit.
Additional details and procedural matters necessary to an understanding of the various issues to be decided will be
stated at appropriate places in the opinion.
I.
SEVERANCE
Before discussing the specific attacks on the district court's denial of severance,
[595 F.2d 1333]
some general principles should be noted. The question of whether charges that have been properly joined ought to be
severed for trial is for the discretion of the trial judge, whose decision will be reversed only upon a showing of clear
abuse. United States v. Tanner, 471 F.2d 128, 137 (7th Cir.), cert. denied, 409 U.S. 949, 93 S.Ct. 269, 34 L.Ed.2d 220
(1972). The defendant has the burden of showing prejudice, which is a difficult one. Id. A denial of severance will rarely
be reversed on review, Tillman v. United States, 406 F.2d 930, 935 (5th Cir.), cert. denied, 395 U.S. 830, 89 S.Ct. 2143,
23 L.Ed.2d 742 (1969), and then only for the most "cogent reasons," United States v. Kahn, 381 F.2d 824, 838 (7th Cir.),
cert. denied, 389 U.S. 1015, 88 S.Ct. 591, 19 L.Ed.2d 661 (1967). There is, moreover, a strong policy in favor of joint
trial "where the charge against all the defendants may be proved by the same evidence and results from the same
series of acts." United States v. Cohen, 124 F.2d 164, 165 (2d Cir.), cert. denied sub nom. Bernstein v. United States,
315 U.S. 811, 62 S.Ct. 796, 86 L.Ed. 1210 (1942). See also United States v. Echeles, 352 F.2d 892, 896 (7th Cir. 1965)
recently quoted in United States v. Harris, 542 F.2d 1283, 1312 (7th Cir.), cert. denied, 430 U.S. 934, 97 S.Ct. 1558, 51
L.Ed.2d 779 (1976).
In the case at bar all appellants assert error in the denial of their motions for severance. Frederick Ingram argues that
the denial deprived him of evidence that would otherwise have been available. The other appellants, whom we shall call

the Illinois defendants, argue that they were prejudiced by the denial because Ingram and his brother (whom the jury
acquitted) defended on a ground antagonistic to the defenses of their co-defendants and because of curtailment of
cross-examination and the spillover effect of evidence admitted only against Frederick Ingram. We turn first to the
argument of the Illinois defendants.
A. THE ILLINOIS DEFENDANTS
1. ANTAGONISTIC DEFENSES
The Ingrams contended that the payments were made only because the Sanitary District threatened to take action that
would have resulted in financial disaster to Ingram Corporation, and therefore neither of them had the "intent (to
influence the performance of an official act) required by the Illinois bribery statute." United States v. Peskin, 527 F.2d 71,
84 (7th Cir. 1975), cert. denied, 429 U.S. 818, 97 S.Ct. 63, 50 L.Ed.2d 79 (1976). It was not necessary to this defense
that the Illinois defendants were guilty of extortion or received bribes, because it was possible that Benton, through
whom the corporation's communications with, and payments to, the Illinois defendants were carried out, did not pass
any of the money on but kept it all himself.9 Thus the Ingram defense was not necessarily antagonistic to the defenses
of others, although it was possible, on the Ingrams' theory, that they were innocent even if the others were guilty.
Even if the defenses were to a degree antagonistic, however, it does not follow that there should have been two or more
trials. One has no right to any tactical advantage that would result if evidence that is admissible against him in either a
joint or separate trial might be unavailable in a separate trial. Cf. Brady v. Maryland, 373 U.S. 89, 90-91, 83 S.Ct. 1194,
10 L.Ed.2d 215 (1963).10 It is therefore the settled rule
[595 F.2d 1334]
that a defendant is not entitled to a severance merely because it would give him a better chance of acquittal. See United
States v. Tanner, supra, 471 F.2d at 137. Thus antagonistic defenses do not require the granting of severance, United
States v. Hutul, 416 F.2d 607, 620 (7th Cir.), cert. denied, 396 U.S. 1007, 90 S.Ct. 573, 24 L.Ed.2d 504 (1970), even
when one defendant takes the stand and blames his co-defendant for the crime, United States v. Joyce, 499 F.2d 9, 21
(7th Cir.), cert. denied, 419 U.S. 1031, 95 S.Ct. 512, 42 L.Ed.2d 306 (1974). Even when the defendant who testified he
was the victim of extortion had dealt directly with the defendant alleged to have extorted the bribe, we sustained the
denial of severance. United States v. George, 477 F.2d 508 (7th Cir.), cert. denied, 414 U.S. 827, 94 S.Ct. 49, 38
L.Ed.2d 61 (1973).
There may be cases, as we recognized in George, in which the conflict among defendants is of such a nature that the
"jury will unjustifiably infer that this conflict alone demonstrates that both are guilty." 477 F.2d at 515. This is not such a
case. The joinder did not result in the exclusion or admission of any evidence of consequence that would not have been
excludable or admissible in separate trials. Nor was any argument made that could not properly have been made in
such a separate trial. There was no cognizable prejudice arising from antagonistic defenses.11
2. CURTAILMENT OF CROSS-EXAMINATION
Janicki complains that cross-examination was curtailed because of the joinder when, during cross-examination of
Benton, the trial judge delivered a general admonition against repetitious cross-examination. Neither Janicki nor the
other Illinois defendants, who adopt by reference his arguments on severance, show any prejudice resulting from the
admonition or point to any specific ruling curtailing their cross-examination. It was, moreover, entirely proper for the
judge to attempt to forestall repetition.
74 | P a g e

3. SPILLOVER EFFECT OF EVIDENCE OFFERED AGAINST FREDERICK INGRAM

Janicki also asserts that he was prejudiced by evidence offered against Frederick Ingram showing that Ingram
Corporation had bribed a Brazilian corporate official between 1969 and 1971, because the conduct of the Brazilian was
similar to that with which Janicki was charged. The trial court instructed the jury to consider the evidence of the earlier
bribe only as to Frederick Ingram's state of mind, but Janicki asserts that this instruction was ineffective. We see no
substantial risk that the jury would believe that because a Brazilian corporate officer took a bribe from Ingram
Corporation, Janicki did also, and therefore we conclude that Janicki was not prejudiced by the admission of this
evidence. Its admissibility as to Frederick Ingram and the effectiveness of the limiting instruction are discussed below.
[595 F.2d 1335]
The Illinois defendants were not deprived of a fair trial by the joinder.
B. FREDERICK INGRAM
Frederick Ingram's attack on the joinder is based on the district court's exclusion of three items of evidence offered to
support his extortion defense, which Ingram argues occurred because he was tried with the men he allegedly bribed.
1. THE MCPARTLIN STATEMENTS AND THE ATTORNEY-CLIENT PRIVILEGE AMONG CO-DEFENDANTS AND
THEIR COUNSEL
Throughout the period covered by the indictment, Benton kept diaries, or appointment calendars, in which he made
notes concerning meetings and telephone conversations, naming the persons involved and often recording the
substance of the conversations. The Benton diaries figured prominently in the government's case, for they corroborated
much of his testimony.
Destroying Benton's credibility was important to Ingram, as it was to the other defendants, even though Ingram's
defense was based, in part, on the argument that he had made the payments in response to the threats Benton had
reported to him, because Ingram's account of events in issue differed materially from Benton's, and because the
government's case hinged largely on Benton's testimony. Since Benton's diaries corroborated so much of his testimony,
it was imperative from the standpoint of all defendants that an effort be made to discredit them.
Such an effort was made, and Frederick Ingram and McPartlin cooperated in that effort. In a brief supporting a pretrial
"Motion for Additional Time to Conduct Document Analysis," Ingram's counsel stated, with reference to contemplated
tests on the Benton diaries,
[T]he defendant Frederic B. Ingram is not the only defendant who may be affected by the results of these tests. Besides
the general effect of the doubts that may be raised as to Benton's veracity and the credibility of the diary entries, the
case against at least one other defendant Robert F. McPartlin may be substantially affected by the results of the
tests. From the results of the tests conducted so far, it appears that at least two of the suspicious diary entries relate to
alleged payments of money to Mr. McPartlin.
An investigator acting for Frederick Ingram's counsel twice interviewed McPartlin with the consent of the latter's
counsel12 for the purpose of determining whether there was a basis for challenging the truth of some of the diary
entries. In the second of these interviews McPartlin made certain statements, which Ingram argues tend to support his
defense. At trial, when Ingram offered evidence of these statements, McPartlin's counsel objected on the ground, inter

alia, of the attorney-client privilege, and the court, after an in camera hearing, sustained the objection on this and
another ground.13
The exclusion of the McPartlin statements would not be reversible error even if he had not been entitled to claim the
privilege. We are satisfied from our examination of the transcript of the in camera hearing, which was sealed and made
a part of the record on appeal, that the statements merely corroborated facts which were admitted in evidence and
which the jury obviously found to be true.14 We do not disclose

[595 F.2d 1337]

cases to "be governed by the principles of common law as they may be interpreted by the courts of the United States,"
R. 501 Fed.R.Evid., the recommendations of the Advisory Committee, approved by the Supreme Court, are a useful
guide to the federal courts in their development of a common law of evidence. 2 J. Weinstein, supra, at 501-20.4 to 50120.5. In this instance we follow the recommendation. The privilege protects pooling of information for any defense
purpose common to the participating defendants. Cooperation between defendants in such circumstances is often not
only in their own best interests but serves to expedite the trial or, as in the case at bar, the trial preparation.16

[595 F.2d 1336]

the contents of the statements because they remain protected by the attorney-client privilege, on which we alternatively
base our ruling on this point.
McPartlin was entitled to the protection of the attorney-client privilege, because his statements were made in confidence
to an attorney for a co-defendant for a common purpose related to both defenses. They were made in connection with
the project of attempting to discredit Benton, a project in which Ingram and McPartlin and their attorneys were jointly
engaged for the benefit of both defendants. Ingram acknowledges that communications by a client to his own lawyer
remain privileged when the lawyer subsequently shares them with co-defendants for purposes of a common defense.
The common-defense rule, which is not as narrow as Ingram contends, has been recognized in cases spanning more
than a century. Chahoon v. Commonwealth, 62 Va. (21 Gratt.) 822 (1871); Schmitt v. Emery, 211 Minn. 547, 2 N.W.2d
413 (1942); Continental Oil Co. v. United States, 330 F.2d 347 (1964); Hunydee v. United States, 355 F.2d 183 (9th Cir.
1965); Matter of Grand Jury Subpoena, 406 F.Supp. 381, 387-389 (S.D.N.Y.1975); see State v. Emmanuel, 42 Wn.2d
799, 259 P.2d 845, 854-855 (1953); Note, "Waiver of Attorney-Client Privilege on Inter-Attorney Exchange of
Information," 63 Yale L.J. 1030 (1954); Note, "The Attorney-Client Privilege in Multiple Party Situations," 8 Colum.J.L. &
Soc.Prob. 179 (1972). Uninhibited communication among joint parties and their counsel about matters of common
concern is often important to the protection of their interests. Note, supra, 8 Colum.J.L. & Soc.Prob. at 179-180. In
criminal cases it can be necessary to a fair opportunity to defend. Therefore, waiver is not to be inferred from the
disclosure in confidence to a co-party's attorney for a common purpose.

Ingram also seems to argue that the communication was not privileged because it was made to an investigator rather
than an attorney. The investigator was an agent for Ingram's attorney, however, so it is as if the communication was to
the attorney himself. "It has never been questioned that the privilege protects communications to the attorney's . . .
agents . . for rendering his services." 8 Wigmore, Evidence 2301 at 583 (McNaughton rev. 1961); cf. United States v.
Kovel, 296 F.2d 918, 921-922 (2d Cir. 1961) (client's communications to an accountant employed by his attorney).
Nor was it, as Ingram contends, fatal to the privilege that McPartlin made the statement, in effect, to Ingram's attorney
rather than his own. When the Ingram and McPartlin camps decided to join in an attempt to discredit Benton, the
attorney for each represented both for purposes of that joint effort. The relationship was no different than it would have
been if during the trial the Ingram and McPartlin attorneys had decided that Ingram's attorney would cross-examine
Benton on behalf of both, and during cross-examination McPartlin passed Ingram's attorney a note containing
information for use in the cross-examination. The attorney who thus undertakes to serve his client's co-defendant for a
limited purpose becomes the co-defendant's attorney for that purpose. A claim of privilege was upheld in circumstances
such as these where communications were made directly to the attorney for another party in In the Matter of Grand Jury
Subpoena Duces Tecum, supra, 406 F.Supp. at 391. United States v. Friedman, 445 F.2d 1076, 1085 n.4 (9th Cir.), cert.
denied, 404 U.S. 958, 92 S.Ct. 326, 30 L.Ed.2d 275 (1971), relied on by Ingram, is not to the contrary. In Friedman the
court held its decision in Hunydee v. United States, supra, inapplicable, because no joint defense or common interest
was alleged. The court went on to state, in the footnote relied upon, that even if Hunydee was applicable, there was no
privilege since "the facts of the conversation negate confidentiality." 445 F.2d at 1085 n.4.

In the case at bar, the judge found, as a preliminary question of fact, from the evidence adduced at the hearing held
pursuant to Rule 404(a), Fed.R.Evid., that McPartlin had made the statements to the investigator in confidence. That
finding is not clearly erroneous.

Inasmuch as McPartlin was entitled to assert the privilege whether Ingram was tried jointly or separately, no prejudice
would have resulted from the joint trial by reason of the exclusion of the McPartlin statements even if those statements
had not been merely cumulative.

Ingram argues that the co-defendants' defenses must be in all respects compatible if the joint-defense privilege is to be
applicable. The cases do not establish such a limitation,15 and there is no reason to impose it. Rule 503(b)(3) of the
proposed Federal Rules of Evidence, as approved by the Supreme Court, stated that the privilege applies to
communications by a client "to a lawyer representing another in a matter of common interest." See 2 J. Weinstein,
Evidence 503-52 (1977). The Advisory Committee's Note to proposed Rule 503(b) makes it clear that the joint-interest
privilege is not limited to situations in which the positions of the parties are compatible in all respects:

2. RELEVANCE OF THREATS AGAINST BENTON

The third type of communication occurs in the "joint defense" or "pooled information" situation, where different lawyers
represent clients who have some interests in common. . . . The rule does not apply to situations where there is no
common interest to be promoted by a joint consultation, and the parties meet on a purely adversary basis.
Quoted in 2 J. Weinstein, supra, at 503-6 to 503-7. (Emphasis supplied and citations omitted.) Although the Congress,
in its revision of the Federal Rules of Evidence, deleted the detailed privilege rules and left the subject of privilege in
federal question
75 | P a g e

Frederick Ingram also argues that joinder caused specific prejudice through the trial court's exclusion, as prejudicial to
other defendants, of evidence of threats of physical harm directed against Benton. The short answer is that prejudice to
other defendants was not the only ground for the exclusion. The excluded evidence consisted of testimony by Ingram
that in the fall of 1972 Benton expressed fear for his own physical well-being if Ingram refused to make the promised
payments to the Chicago officials, and testimony by two other witnesses that Benton told them in October 1974 that
someone had threatened him with physical harm. To begin with, both statements
[595 F.2d 1338]
by Benton were said to have been made long after February 1972, when Ingram, by his own admission, authorized
Benton to make payments to secure the contract. There is no indication in the record that the second, made long after
all payments were made was ever communicated to Ingram. The alleged threats were directed at Benton, not Frederick
Ingram, who had no dealings in the matter with anyone outside Ingram Corporation. Finally, Ingram's theory throughout

the trial was economic, not physical, coercion.17 The evidence was properly excluded as irrelevant, and it would have
been equally irrelevant if Ingram had been tried separately.

On the other hand, if you do find that a defendant authorized payments because of his fear of economic loss, then you
should proceed to a consideration of whether that fear of economic loss was such as to render his action involuntary
within the meaning of the law.

3. RELEVANCE OF AN UNRELATED PAYMENT BY A THIRD-PARTY

Frederick Ingram also contends that the joinder caused the exclusion of evidence that an attorney who represented
Ingram Corporation before the Illinois Commerce Commission made a $5,000 contribution to McPartlin's reelection
campaign fund, and that the payment was motivated in part by McPartlin's having recommended the attorney's firm to
Ingram Corporation. There was no showing that the attorney was coerced. This evidence, offered first by the
prosecution and then by the Ingrams, was rightly excluded on both occasions as irrelevant. In rejecting the Ingram offer
the court said that it "could be prejudicial to McPartlin without being probative of any issue as far as the Ingrams are
concerned." Prejudice to McPartlin aside, the trial court was correct as to the probative value of the evidence.
We therefore conclude that the denial of the motions for severance was not error.

There are several things to consider in this connection. First, did the defendant fear loss as a result of a withholding of
something to which he believed Ingram Barge Company was already legally entitled? Specifically, did the defendant
believe that the Metropolitan Sanitary District was already under a legal obligation to pay Ingram Barge for the pipeline?
Did he believe that the threatened assessment of liquidated damages was legally unjustified?
The answers to these questions are important because there is a difference between paying a public official for
something one is entitled to receive and paying a public official for something one is not entitled to receive.
If one does not believe he is legally entitled to receive the thing in question, then, no matter how much he needs it and
no matter how great the economic loss one might suffer by not receiving it, there can be no legal justification for paying
a public official to get it. Such a payment is bribery, pure and simple.

SPRECHER, Circuit Judge:

I concur in the portions of this opinion prepared by Judges Pell and Tone.
II.
EXTORTION DEFENSE INSTRUCTION
As noted earlier, defendant Ingram never denied making certain of the illicit personal payments to officials of the
Sanitary District. Instead Ingram premised his defense to the counts relating to these payments on the theory that these
payments were not intended as bribes but were extorted from him by threats that, unless these payments were made,
the Sanitary District would, contrary to an alleged understanding, refuse to purchase the pipeline which Ingram had
already constructed and would invoke the liquidated damages clause to further penalize Ingram Corporation.18 In
relation to these arguments, the trial court gave the jury the following instructions on the defense of extortion:
Now, I have just told you that willful conduct, which is required in each of the crimes charged in this indictment, must be
voluntary.

However, if one is legally entitled to the thing in question or in good faith believes he is legally entitled to it, then the fear
of economic harm from not receiving it may be sufficient to render the act of payment involuntary, depending upon three
additional considerations: The seriousness of the economic harm perceived by the defendant, the effect that perception
had on his ability to exercise free choice, and the defendant's awareness of reasonable alternatives to the making of the
demanded payments.
If a defendant did not in fact fear serious economic harm or if his fear did not substantially impair his ability to exercise
free choice or if he was aware of actions he might take to forestall the harm without making the payments and chose not
to take those actions, then his conduct in authorizing the payment cannot be considered involuntary within the meaning
of the law.
In order to prove, therefore, that a defendant acted willfully as opposed to involuntarily in authorizing a payment, the
government must prove one of the following things: (a) that the defendant was not motivated by a fear of economic
harm in authorizing the particular payment, or (b) the thing which the defendant sought to obtain by making the payment
was not something he believed Ingram Barge Company was legally entitled to have without making the payment, or (c)
the defendant did not perceive the threatened economic harm to be of serious magnitude, or (d) the defendant's fear
was not such as to substantially impair his ability to exercise free choice, or (e) and finally, the defendant was aware of
reasonable alternatives to making the payments and chose not to pursue those alternatives.

[595 F.2d 1339]

One of the defenses raised by the Defendants Frederick B. Ingram and E. Bronson Ingram is that they authorized
certain payments to be made only because they were told unless the payments were made, the pipeline would not be
paid for and the liquidated damage provision would be used against Ingram Barge Company in an unreasonable and
punitive manner. These defendants claim, therefore, that they did not commit bribery or conspire to commit bribery and
lacked the intent to bribe.
In analyzing this defense, there are several things for you to consider. First, you should determine whether a defendant
did in fact authorize payments because of a fear of economic loss. If you find that a defendant did authorize any of the
payments in question, but that he did so solely to procure an economic advantage rather than out of fear of an
economic loss, then this defense that the act was involuntary must fail.
76 | P a g e

Defendant Ingram urges that this instruction was prejudicial error in three respects. In considering these contentions we
shall assume without deciding, that as the instruction states, under Illinois law, if one who pays a bribe is or believes
himself to be "legally entitled" to have the official take the action induced by the bribe, "then the
[595 F.2d 1340]
fear of economic harm from not receiving it may be sufficient to render the act of payment involuntary." This court's
decision in United States v. Peskin, 527 F.2d 71, 84 (7th Cir. 1975), cert. denied, 429 U.S. 818, 97 S.Ct. 63, 50 L.Ed.2d
79 (1976), in the following words, left open the question whether this is so but did establish the rule applicable in the
case of a discretionary official decision:

[A]t least in a case where a discretionary or legislative decision . . . has been requested, the withholding of such action
until a money demand is met could not negate the intent (to influence the performance of an official act) required by the
Illinois bribery statute.
Id. at 84.
First, Ingram argues that the distinction between economic loss and gain was erroneous. The prejudice from this
distinction allegedly arose from the fact that the jury was likely to define economic loss as the payment of money and
economic gain as the receipt of money and therefore might have rejected the extortion defense out of hand on the
ground that the admitted object of the payment was to complete the sludge-hauling project and thereby gain a profit. In
response we note initially that Ingram here has too narrowly characterized his own defense. Ingram asserted throughout
the trial and continues to assert before us that the payments were at least in part motivated by a desire to avoid
assessment of liquidated damages. Even under the simplistic construction of the loss-gain distinction which Ingram
alleges was most likely, this would constitute an economic "loss" thereby preventing the jury from rejecting the defense
on the basis of the loss-gain distinction.19 Moreover it is not clear that Ingram preserved this objection for appeal; the
written objection to the instruction tendered at trial makes no mention of any error in this distinction.20 Finally, we are
not convinced that the jury would put such a simplistic construction on the loss-gain distinction. Certainly it requires no
extraordinary economic acumen to realize that the receipt of money may not represent an economic gain if the amount
received is less than an amount to which one was previously entitled. Conversely, an ordinary juror would certainly
realize that a real economic gain accrues only when a person becomes entitled to something to which he had no prior
entitlement, that is, when a discretionary official act is performed for his benefit. The district court followed this gain-loss
instruction with a discussion of the concept of entitlement, explicitly denoting a "loss" as a failure to receive a benefit to
which one was entitled, thereby further clarifying the interdependent relation between these two concepts.21
[595 F.2d 1341]
Ingram advances a second attack on this instruction. He argues that the district court erred in instructing the jury that
the extortion defense is unavailable if the defendant did not believe that he had a legal entitlement to the official action.
Once again we must note that this objection appears not to have been properly preserved for appeal, since Ingram's
objection to the trial court did not criticize the entitlement aspects of the instruction.22 Even if this objection were
properly preserved, it lacks merit. The district court's instruction is consistent with Peskin.23
Ingram's final objection to the trial court instruction is that the instruction, by its emphasis on the voluntariness of the
payments, implicitly disallowed the extortion defense and permitted only the narrower defense of duress. Assuming that
the distinction drawn in United States v. Barash, 365 F.2d 395 (2d Cir. 1966), between the defenses of duress and
extortion is correct,24 the instruction could not have prejudiced Ingram since Ingram, before this court and the trial
court, characterized his own conduct in such a way as to absolutely preclude the availability of the extortion defense,
even assuming that the voluntariness of his conduct alone would not negate the extortion defense. Ingram, during the
course of the trial, admitted that he had no legal entitlement to the benefits which his payments were designed to
obtain.25 Accordingly he is absolutely precluded from prevailing on an extortion defense under Peskin, which makes
that defense unavailable where the defendant is seeking to obtain a benefit not owed and thus the emphasis
[595 F.2d 1342]
of the instructions on involuntariness could not have harmed the defendant.26
III.
77 | P a g e

EVIDENCE OF INGRAM'S BRIBES OF FOREIGN OFFICIALS

At trial the government, seeking to rebut Ingram's testimony that he made the payments only as a victim of extortion,
sought to demonstrate that in other instances Ingram had been willing to make such payments without the alleged
incentive of extortion. The trial court carefully screened this proffer with an ex parte review of the evidence, an in camera
meeting with all counsel, and a voir dire of the government witnesses. After this careful consideration, the court,
although rejecting a substantial portion of the government's offer of proof,27 permitted the government to introduce
testimony that Ingram had made surreptitious payments to an employee of a semi-official Brazilian corporation in order
to receive preferential treatment.
The government introduced at trial the testimony of Chris Daley, an official of the Ingram Corporation, to establish the
government's account of Ingram's alleged
[595 F.2d 1343]
prior bribe. Daley testified that in 1967 the Ingram Corporation became interested in engaging in an off-shore drilling
project conducted by Petrobas, a Brazilian oil company owned jointly by the Brazilian government and private investors.
Daley and Benton then met with Levindo Caniero, the Petrobas official with responsibility for procuring the contractor for
the off-shore drilling. As a result of this meeting, Caniero agreed to provide inside information to Ingram Corporation to
assure that it was low-bidder in exchange for a "payoff or commission." Benton, Daley and Caniero agreed that these
payments should be made into a Swiss bank account. The contract was then awarded to Ingram Corporation through a
letter of intent. However, Caniero threatened to withdraw the letter of intent because of a delay in Ingram Corporation's
establishment of a Swiss account for him. At this point Daley informed Ingram that the letter of intent was about to be
lost because of the delay in making the payoffs. Ingram then put Daley in touch with an international banker at Lehmann
Brothers to expedite the establishment of the account. Subsequently, between 1969 and 1973, $172,000 was paid into
the account.
We hold that this evidence was properly admissible against Ingram in that it tended to refute Ingram's defense that he
lacked the intent to bribe the Chicago defendants and made the payments only to satisfy extortionate demands. Rule
404(b) of the Federal Rules of Evidence permits proof of prior crimes or acts where it is used for such purposes "as
proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident." This
provision has been interpreted as permitting admission of evidence of prior acts as long as it has a substantial
relevance to an issue other than showing that the defendant has a criminal character and therefore possesses a
propensity to commit criminal acts. See, e. g., United States v. Sigal, 572 F.2d 1320, 1323 (9th Cir. 1978). Or, as this
court has held, such evidence is admissible "if, entirely apart from the matter of `propensity,' it has a tendency to make
the existence of an element of the crime charged more probable than it would be without such evidence." United States
v. Fairchild, 526 F.2d 185, 189 (7th Cir. 1975), cert. denied, 425 U.S. 942, 96 S.Ct. 1682, 48 L.Ed.2d 186 (1976)
(emphasis added).
Ingram forwards three attacks on the admission of this evidence. First, he claims, the prior payments to Caniero were
not sufficiently similar to the payments for which he was indicted to establish their relevance to his intent. Before
examining the particular dissimilarities urged, we note that there is no requirement that the prior acts be virtually
identical to the charged acts and that it is sufficient that the acts be similar enough and close enough in time to be
relevant. The major thrust of Ingram's argument is that there is no showing that the Brazilian payments were either
illegal or immoral since such payments are simply a way of doing business in Brazil. Initially we must note that we would
be loathe to assume that surreptitious payments to governmental or private officials is a common and accepted practice
in Brazil absent proof to that effect. Ingram admits that neither he nor the government offered proof on that matter, and
thus this argument rests solely on Ingram's facile and unsupported characterizations of Brazilian practice. However,

even were we to accept that such payments are a legal and accepted practice in Brazil,28 we do not find that fact
sufficient to differentiate the two transactions. In United States v. Boggett, 481 F.2d 114

Daley that "we could count on him for any assistance we need." Considering all the evidence, particularly Ingram's
reaction to Daley's statement and his knowledge that Ingram was assured to be the low bidder, there is a convincing
portrait of Ingram's knowledge of the purpose of the Caniero payments.

[595 F.2d 1344]

(4th Cir.), cert. denied, 414 U.S. 1116, 94 S.Ct. 850, 38 L.Ed.2d 744 (1973), the government was permitted to introduce
in a Travel Act bribery prosecution against a zoning official evidence showing a series of transactions wherein gifts were
made to the official and favorable actions by him on behalf of the donor followed shortly thereafter. The defendant urged
that since no showing of a quid pro quo had been made by the government there was nothing to establish anything
improper in these transactions. The court, however, admitted the evidence holding that regardless of the propriety of the
individual's acts, the evidence demonstrated a course of conduct which indicated the defendant's "preference for favors
and gifts over his public duty." Id. at 115. Likewise here, whatever the moral and legal status of the Brazilian payoffs,
they indicate that the defendant had knowingly circumvented ordinary business channels with "facilitating payments."
Admittedly the illegality of such payments to government officials in the United States would make such payments less
likely than those not involving illegality; that, however, does not deny that one making such payments, legal or not, is
more likely to have the intent to influence official action by similar payments in other instances than one who has never
made such payments.29 The other differences urged by Ingram are even less substantial. The fact that the Brazilian
official was an employee of a semi-public entity and that the indictment alleged payments to employees of a wholly
public governmental entity is a completely negligible difference, unless of course one makes the irrational assumption
that one who would knowingly cheat both the public and private investors would not knowingly cheat the public alone.
Nor is it relevant that the Brazilian payoff was not initiated by Ingram: we can see no difference in active participation in
making payments suggested by another and initiation of the suggestion itself, since one who is willing to perform the
essential act of bribery that is, to dispense the bribe moneys themselves must be presumed to have also been
willing to suggest the bribe. Finally, we reject Ingram's characterization of the Brazilian transaction as involving less
harm that the Sanitary District bribes since the latter added the amount of the bribes onto the contract price. Nothing in
this record suggests that the amounts charged to Brazil would not have decreased once the cost of the project was
reduced by the amount of the bribes. Further, it is axiomatic that for a competitively-bid project, where no inside
information was available, Ingram would have bid less and therefore charged less than where the project is guaranteed
by virtue of a bribe and Ingram could set its own price. It is therefore completely disingenuous to suggest that the level
of harm differed.
Ingram's second objection is that there was no clear and convincing proof that Ingram knew the purpose of the
payments made to Caniero. We have held that there must be clear and convincing evidence of the prior act to justify its
admissibility,30 and we find that there is evidence in the record to meet that standard. Daley testified in camera as to
Ingram's reaction when he learned of the payments and that Benton's delay in setting up the account might lead to a
revocation of the letter of intent. Daley stated:
Benton was to open it, which we wouldn't do. So that's when I called Fritz, and Fritz says, "Jesus Christ. How did you
get into that," or whatever. And he says, "Okay, okay. We will go ahead and call him back and see what we can put
together."
[595 F.2d 1345]
(Tr. 5638). At trial, Daley testified as to Ingram's response to knowledge of the payments in the following terms: "Mr.
Ingram, in disgust, says `Well, okay. I will see what I can do about it. . . .'" (Tr. 5674). It is difficult to understand why
Ingram would have responded "in disgust" or with queries as to how Daley became involved "in that" unless he knew
that the payments were illicit payments made to procure unauthorized benefits or at least were improper in some
respect. Furthermore, the government introduced a memorandum sent out by Daley to Ingram in which Daley stated
that he knew after speaking with Petrobas personnel that Ingram would be the low bidder and that Caniero had assured
78 | P a g e

Finally, Ingram urges, relying on Rule 403 of the Federal Rules of Evidence, that the prejudicial impact of the evidence
outweighed its relevance and therefore should have been excluded. Ingram must sustain a heavy burden to succeed on
this argument since the careful balancing of the probative value of prior acts versus their possible unduly prejudicial
effect is uniquely appropriate to the informed discretion of the trial judge. See United States v. Peskin, 527 F.2d 71, 84
(7th Cir. 1975), cert. denied, 429 U.S. 818, 97 S.Ct. 63, 50 L.Ed.2d 79 (1976); United States v. Sigal, 572 F.2d 1320,
1323 (9th Cir. 1978). More precisely, this balancing entails considering whether the probative value this evidence had in
indicating that Ingram's intent was to bribe, not to satisfy extortionate demands, outweighs its possible prejudicial effect,
that is, the possibility that the jury will take the evidence to be indicative of a criminal disposition.
The highly judgmental character of this test mandates that we not restrike the balance ourselves but instead examine
only the manner in which the district court exercised its discretion. The record here shows that the trial court was
meticulous and deliberate in its decision to admit the evidence. The trial court heard in camera evidence of a number of
prior acts which the government had sought to introduce.31 After extensive discussion the court permitted proof only of
the Petrobas transaction. Further, the court required the government to present its witness to the Petrobas transaction in
camera to confirm the substance of the testimony. Finally, to minimize any prejudice the court preceded the presentation
of this witness's testimony before the jury with an extensive limiting instruction emphasizing that Ingram was not "on
trial" for this previous transaction, that the evidence was to be considered only as it concerned Ingram's intent in the
Sanitary District transaction and that the court passed no judgment on the value of this evidence. Courts have often
looked to these factors indicating due consideration to uphold the trial court's judgment. See, e. g., United States v.
Carleo, 576 F.2d 846 (10th Cir. 1978). In particular the use of limiting instructions has been accorded great significance.
See United States v. Sigal, 572 F.2d 1320, 1323 (9th Cir. 1978). We therefore decline to hold that the trial court abused
its discretion.
IV.
GOVERNMENT'S COMPLIANCE WITH BRADY V. MARYLAND
During his opening statement, counsel for the government revealed that the principal government witness, Benton, had
embezzled and applied to his own benefit $375,000 of the money he obtained from Ingram in order to pay off the
Chicago defendants. Although the government had turned over to the defendants both Benton's and Ingram
Corporation's financial records, from which the government asserts the defalcations could have been discerned by the
defendants, the government did not turn over to
[595 F.2d 1346]
the defendants Benton's grand jury testimony in which he referred to the $375,000 as "the amount of money I am
responsible for keeping," nor did the government disclose that Benton had expressly admitted the embezzlements in
interviews with government counsel. Defendants McPartlin and Janicki, relying on Brady v. Maryland, 373 U.S. 83, 83
S.Ct. 1194, 10 L.Ed.2d 215 (1963), urge that this failure to disclose this information earlier violated their Due Process
rights and mandates reversal of the convictions.
We note initially that Brady and its successor, United States v. Agurs, 427 U.S. 97, 96 S.Ct. 2392, 49 L.Ed.2d 342
(1976), address a thoroughly different problem than the one before us. The concern of Agurs and Brady is whether the
suppression of exculpatory material until after trial requires that a new trial be given so that this evidence may be

considered. The Court in Agurs characterized the situations to which the Brady principles apply as those involving "the
discovery, after trial, of information which had been known to the prosecution but unknown to the defense." 427 U.S. at
103, 96 S.Ct. at 2397 (emphasis supplied). Indeed the standard developed in Agurs can only sensibly be applied to the
suppression of evidence throughout the trial: "if the omitted evidence creates a reasonable doubt that did not otherwise
exist, constitutional error has been committed. Id. at 112, 96 S.Ct. at 2402 (emphasis supplied).

regular part of his business activity as a vice-president of Ingram Corp., noting in them anticipated meetings, telephone
calls, personnel matters and bids. These entries were characterized by Benton as "things which I would need to look
back on," to recall a bid or to prepare letters and memoranda, for example.

The defendants here, however, do not complain of a total suppression of favorable evidence but merely attack the
timing of the disclosure of such evidence. Here the prosecutor did not conceal or withhold evidence of Benton's
defalcations but waited until early in the trial to reveal them.32 There is nothing in Brady or Agurs to require that such
disclosures be made before trial, and we have explicitly held this in the past. United States v. Stone, 471 F.2d 170, 17374 (7th Cir. 1972), cert. denied, 411 U.S. 931, 93 S.Ct. 1898, 36 L.Ed.2d 391 (1973). See also United States v.
Lomprez, 472 F.2d 860 (7th Cir. 1972), cert. denied, 411 U.S. 965, 93 S.Ct. 2144, 36 L.Ed.2d 685 (1973). Thus, even
though evidence might be material or might create a reasonable doubt as to guilt, Due Process, albeit requiring eventual
disclosure, does not require that in all instances this disclosure must occur before trial.

It was the regular course of business for Mr. Benton to make entries in diaries about the things he did during the course
of a business day, where he went, what people said to him, what commitments he made and what commitments were
made to him in connection with that business. The entries that are contained in the diary, in the series of diaries, do
pertain to Ingram's business.

The appropriate standard to be applied in a case such as this is whether the disclosure came so late as to prevent the
defendant from receiving a fair trial. See United States v. Stone, 471 F.2d at 174. After considering the record and the
claims of prejudice forwarded by the defendants, we cannot say that this disclosure came so late as to violate Due
Process.
The defendants, apparently relying on their misinterpretation of Brady as a constitutional mandate for pretrial discovery,
concentrated on the exculpatory nature of the evidence and barely developed before this court any specific ways in
which they were prejudiced by this delay.33 McPartlin merely argues that, had the Benton embezzlements been
revealed before trial, "specific requests could have been directed toward more detailed information concerning these
[embezzled] funds. . . . A thorough investigation into the disposition of those funds which he admittedly retained might
have revealed that additional funds were
[595 F.2d 1347]
similarly expended, deposited or hidden." Brief for Defendant McPartlin at 34-36. It is difficult for us to discern any
undue prejudice on this basis. To begin with, there was nothing to preclude the defendants from having made additional
investigations between the time of the disclosure and the close of the evidence almost two months later, and yet nothing
in the record reveals that defendants directed any further inquiries to Benton. This omission is even more important
given the statement of the trial court that it would reconsider the defendant's motion for a recess if it later became
apparent that "anyone has in fact been prejudiced by a late disclosure." Tr. at 250. Nor did the defendants subsequently
renew their request for a continuance. Thus, given the failure of the defendants to pursue adequately any subsequent
investigation and their subsequent failure to request additional time for any investigation thoroughly discredits their
assertion that they were prejudiced by the timing of the disclosure.
V.
ADMISSION OF BENTON'S DESK CALENDARS
At trial the government introduced as exhibits over the objections of the defendant, the desk calendar-appointment
diaries of William J. Benton described above, Part I, B, 1. These diaries documented in some detail the dealings of
Benton with the Chicago defendants. As a foundation for admission of the diaries, Benton testified that he had kept such
business diaries since 1952 or 1953 and that he maintained these diaries during the period of his dealings with
Metropolitan Sanitary District officials. Benton further testified that he kept these diaries and made entries in them as a
79 | P a g e

In admitting the diaries the trial court made the following findings:

The contents of the diaries further indicated their reliability to the district court:
I find no indication of a motive to falsify. At the time these entries were made back in 1971 and 1972, there is not the
slightest bit of evidence to suggest that Mr. Benton thought this scheme was going to be disclosed; that he thought that
he would be caught. There is nothing self-serving about these entries. They implicate Mr. Benton in serious criminal
misconduct. Indeed, if he were unavailable, I think these diaries might well be admissible as statements against penal
interest, so incriminatory are they of Mr. Benton.
So I think they have the earmarks of reliability in that sense.
We agree with the district court that these diaries were admissible. These diaries clearly fulfilled all the requirements
which justify the admission of business records under Federal Rule of Evidence 803(6). These records were kept as
part of a business activity and the entries were made with regularity at or near the time of the described event. Most
importantly these diaries satisfied the central rationale of the business records exception: since Benton had to rely on
the entries made, there would be little reason for him to distort or falsify the entries.
The application of the business record exception to documents differing greatly from the classic "shopbook" or business
ledger is well established. See, e. g., United States v. Reese, 568 F.2d 1246 (6th Cir. 1977) (scrapbook of press
clippings compiled by public relations department);
[595 F.2d 1348]
United States v. Yates, 553 F.2d 518 (6th Cir. 1977) (letter from bank to employees describing recent robbery); Magnus
Petroleum Co. v. Skelly Oil Co., 446 F.Supp. 874 (E.D.Wis.1978) (corporate officer's personal notes of business
negotiations); Aluminum Co. v. Sperry Products, Inc., 285 F.2d 911, 916 (6th Cir. 1960), cert. denied, 368 U.S. 890, 82
S.Ct. 139, 7 L.Ed.2d 87 (1961) (inventor's diary of progress on invention). Moreover, the business record exception has
been applied to admit documents indistinguishable in kind from Benton's desk calendars. In United States v. Evans, 572
F.2d 455 (5th Cir. 1978), the court permitted the introduction of "pocket-size appointment calendars known as
`daytimers.'" Id. at 487. The court noted in support of its holding that these calendars were business records that "[t]he
entries purport on their face to list . . . business entertainment expenses . . . [and] such documents were used as a
matter of company policy." Id. at 488. Likewise, the calendars here on their face describe business matters and, even if
not mandated by Ingram policy, were kept in accord with the widespread practice of business executives to maintain
such records.
Defendants McPartlin and Weber have argued that several facts differentiate the records here from admissible business
records. First, the defendants stress that some of the entries in the calendars were made out of sequence. The
defendants' document expert testified that fifteen entries out of all those made over a two-year period were made out of

sequence. We do not however agree with the defendants that nonsequential entries preclude admissibility as business
records. Although there is no dispute that Benton's entries in a few cases did not proceed page by page in the book, the
defendants' document examiner could not disprove Benton's statements that entries were made at or about the time of
the described event.34 Indeed, it seems to us that insisting that entries proceed methodically from the first to last page
is as pointless as insisting that ledger and account entries proceed in alphabetical order or from top to bottom. As long
as the entries satisfy the contemporaneity and regularity requirements, their sequence is irrelevant. This point was
made clear by the Tenth Circuit in United States v. Carranco, 551 F.2d 1197 (10th Cir. 1977). There the defendants
attempted to block the admission of freight bills on the ground that some of the notations on the bills occurred after the
document had been completed by the freight originator. The court rejected this argument noting:
The notations on the freight bill were explained by the witnesses, and this is probably more than is required by the
business records exception to the hearsay rule. As pointed out by the appellee, a freight bill is not meant to be a static
document nor is it used as such. As testified to by those familiar with the shipping business, a freight bill is used by
many different people and it is their job to make notations on the freight bill so it will continue to be an accurate
description of the shipment. It was adopted by ICX as its record, in the regular course of its business, when the ICX
driver signed it as he picked up the interline shipment. He used it as an ICX record, verified the shipment, and made the
notations on it. The notations as testified to by the witnesses were thus also made in the regular course of business of
ICX. One of the freight bill copies went into the ICX terminal records, and one or more copies continued with the
shipment. The requirements of Rule 803(6) of the Federal Rules of Evidence were met.
Id. at 1200. Similarly here there is no reason to require that an appointment calendar remain a "static document"; indeed
as appointments and other matters change
[595 F.2d 1349]
the calendar to be useful must be nonsequentially revised. The only requirement is that these revisions be
contemporaneous and regular, and the defendant's proof of simple nonsequentiality does not rebut Benton's testimony
that the entries were made regularly and contemporaneously. However, even if several of the entries were made noncontemporaneously, it remains within the district court's discretion to determine whether the few non-contemporaneous
entries so undermine the reliability of the record as to preclude admissibility. Given that there were only fifteen nonsequential entries over a two year period, even if many of these were shown to be non-contemporaneous, we could not
say that this discretion was abused.
The defendants also urge that these diaries could not be business records because they were relied on by no one other
than Benton and in any event contained many entries of a purely private nature, viz., the alleged extortion scheme
engaged in by Benton which supposedly was not related to Ingram Corporation's official business. However, nothing in
the text or comments to the Rule provides any indication that a necessary prerequisite to the reliability of a business
record is verification by persons other than the one making the entry. Indeed, the Advisory Committee Notes appear to
suggest otherwise:
The element of unusual reliability of business records is said variously to be supplied by systematic checking, by
regularity and continuity which produce habits of precision, by actual experience of business in relying upon them, or by
a duty to make an accurate record as part of a continuing job or occupation.
Certainly the second and fourth, and possibly the first, indicia of reliability contemplate only the accuracy imposed by the
record keeper on himself. Accordingly, admissibility has been upheld even in instances in which the records were made
only for the benefit of the record keeper himself and not for the benefit of the entire business entity. See United States v.
Prevatt, 526 F.2d 400, 403 (5th Cir. 1976); Aluminum Co. of America v. Sperry Products, Inc., 285 F.2d 911, 916 (6th Cir.
1960), cert. denied, 368 U.S. 890, 82 S.Ct. 139, 7 L.Ed.2d 87 (1961).
80 | P a g e

Nor do we consider it significant that the illegality of Benton's activities may have removed these actions in some
technical sense from a narrow construction of his duties at Ingram. This argument proceeds on the false premise that
because Benton's activities were not a part of Ingram Corporation's business, they could not be a business at all. United
States v. Re, 336 F.2d 306 (2d Cir.), cert. denied, 379 U.S. 904, 85 S.Ct. 188, 13 L.Ed.2d 177 (1964), addressed, and
rejected, such a contention. There the defendant after having gained control of a company, engaged in a fraudulent
scheme for the distribution of that company's securities for his own personal benefit. The court was unpersuaded that
records relating to that scheme, since they were not part of the company's business, could not constitute business
records. The court pointed out that the defendant, "while distributing a huge block of control stock to the investing public
through a complex system of brokerage accounts and over-the-counter sales, was engaged in a `business,'" albeit a
business of his own and not the company's. Id. at 313. The court further rejected the notion that business records would
lose admissibility as such because of the illegality of the underlying business. We think that the same rationale applies
here. Benton was engaged in systematically negotiating under-the-counter payments either for himself or the Chicago
defendants in order to facilitate the award of business contracts. Although this is not a business of "the usual orthodox
nature" (id.), there is no question that this bribery scheme was as much a business as a fraudulent securities-marketing
scheme.
However, even if there were to be some question as to whether Benton's activities constituted an independent business,
we believe that his activities can also be characterized as part of Ingram's business. As long as the recorded activities
had become, properly or not, an integral part of Benton's business activities for Ingram, the records are not too personal
to preclude admissibility
[595 F.2d 1350]
under this exception. In this matter we are persuaded by United States v. Schiller, 187 F.2d 572 (2d Cir. 1951). There
the defendant, a government employee in the Rent Control Program, maintained a diary which evidenced a bribe paid
to him. The court, in refusing to consider a Fourth Amendment challenge to the admission of the diary premised on the
personal, non-official nature of the papers, noted:
We think . . . there was a sufficient showing that the entries introduced in evidence dealt with official duties. Such
matters as rent adjustments and recommendations regarding the same were within his general duties, whether he
performed them rightly or wrongly, at lunch or elsewhere. . . .
187 F.2d at 575 (emphasis supplied). Certainly if such papers have sufficient business character to remove them from
the personal paper protections of the Fourth Amendment, they have sufficient reliability to permit admissibility.
Defendants finally rely heavily on Buckley v. Altheimer, 152 F.2d 502 (7th Cir. 1945) in support of their position. In
Buckley, this circuit declined to permit, under the business record exception, the admission of a diary which contained
entries documenting the amount of indebtedness between two parties, Frost and Altheimer. The court, in denying
admission, noted that "[t]he book did not contain any regular set of entries relating to any accounts between Frost and
Altheimer." Id. at 507. It was argued that, although no claim was made that the entries in the diary occurred in the
regular course of business and was "informally kept," the diary should have been admitted because the entries were
made "precisely and meticulously." Id. The court rejected this argument, stating that "private diaries as distinguished
from account books or individual memoranda of particular transactions" are inadmissible. Id. at 508. It is this latter
statement upon which the defendants rely.
We believe however that the defendants' emphasis on the court's language concerning "private diaries" is misplaced.
We do not believe that the court there intended to make any per se rule precluding the admissibility of private diaries;
instead it is clear that the decisive factor in that case was that no regular entries had been made documenting the
relationship. The desk calendar before us is clearly a record of a different order: regular and frequent entries

documenting the relation between Benton and Sanitary District officials were made systematically for the purpose of
allowing Benton to rely on its accounts of the status of the relationship.
We note as a final matter that even if any of the defendant's arguments were sufficient grounds to prevent admission of
these diaries under the business record exception, they would be admissible under two other exceptions. First, they
would be admissible under the "residual" exception, Federal Rule of Evidence 803(24).35 A number of factors combine
to demonstrate the reliability of the entries: the highly self-incriminatory nature of the entries themselves, the regularity
with which they were made, Benton's need to rely on the entries. Where evidence complies with the spirit, if not the
latter, of several exceptions, admissibility is appropriate under the residual exception. See generally, United States v.
Ianconetti, 406 F.Supp. 554 (E.D.N.Y.), aff'd, 540 F.2d 574 (2d Cir. 1976), cert. denied, 429 U.S. 1041, 97 S.Ct. 739, 50
L.Ed.2d 752 (1977) (especially Judge Weinstein's opinion for the district court). Furthermore the degree of reliability
necessary for admission is greatly reduced where, as here, the declarant is testifying and is available for crossexamination, thereby satisfying
[595 F.2d 1351]
the central concern of the hearsay rule. Second, these calendars would also be admissible under Rule 801(d)(2)(E) as
statements "by a coconspirator of a party during the course and in furtherance of the conspiracy." Since these entries
were made so that Benton could rely on them in carrying out his scheme, they aided and were "in furtherance of" the
conspiracy. See United States v. Evans, 572 F.2d 455 (5th Cir. 1978).
VI.
WEBER'S PRIOR CONSISTENT STATEMENTS
The government's evidence revealed that the first installment of the bribe money consisted of $75,000 given to
McPartlin in Weber's presence. Some part of that amount consisted of thousand-dollar bills. The government further
presented evidence to establish that three days after this cash payment, Weber deposited nine thousand-dollar bills in
the bank account of one of the companies controlled by Weber. Weber, in an attempt to rebut the damaging inferences
that could properly be drawn from such a cash deposit, testified that he obtained this money from a safe-deposit box
maintained by himself and his mother. His mother testified that they indeed had such a joint safe-deposit box and that it
did contain several thousand-dollar bills. As further corroboration, Weber sought to introduce the testimony of his
accountant, as well as the accountant's copy of the bank statement recording the deposit. In an offer of proof Weber
indicated that the accountant would testify that in 1973, two years after the deposit, Weber told him, in connection with
his preparation of an IRS audit, that the funds were obtained from Weber's mother. The proffered bank statement
contained the accountant's notation next to the sum: "Overdraft covered and paid in cash from Mother (per FNW)." The
trial court refused the admission of the accountant's testimony and his copy of the bank statement. Defendants
McPartlin36 and Weber urge that this was error.
Two theories of admissibility are advanced. First, it is argued that the evidence was admissible under Federal Rule of
Evidence 801(d)(1)(B) as a prior consistent statement.37 We do not believe, however, that these statements were
admissible under this theory. Evidence offered under this theory must have some probative value in rebutting the
implied charge of recent fabrication or improper motive. However, where a motive to falsify also existed at the time of
the earlier statement, it possesses no such probative value. As Judge Weinstein correctly pointed out in his treatise on
the Federal Rules:

Substantive use under Rule 801(d)(1)(B) is limited to situations where high probative value is most likely . . . Evidence
which merely shows that the witness said the same thing on other occasions when his motive was the same does not
have much probative force "for the simple reason that mere repetition does not imply veracity."
4 J. Weinstein & M. Berger, Evidence 801(d)(1)(B)[01] at 801-100 (1977). Obviously Weber would have had no more
reason to tell the IRS that the proceeds were illegal bribes than he has a motive now to tell that to a jury in a criminal
prosecution. Indeed, Weber would have even had a further
[595 F.2d 1352]
reason not to tell the IRS that the $9,000 was part of a kickback: a bribe would be includable in Weber's gross income
whereas an appropriation of jointly-held funds might not have been. Thus, we do not feel that these prior statements
were admissible under 801(d)(1)(B).
As a second ground of admissibility, Weber and McPartlin urge that the bank statement was admissible as a business
record under Federal Rule of Evidence 803(6). This argument creates a paradoxical tension with their arguments that
Benton's desk calendars were not business records. The defendants assailed the diaries on the grounds that the entries
were not made at or near the time of the event related (but recorded in advance as reminders of appointments) and that
many of the entries were derived from "second or third-hand information." Brief for Defendant Weber at 7. Yet the
defendants urge that a single notation of a cash transaction made more than two years after the transaction and based
solely on information supplied by someone other than the person making the entry constitutes a business record. We do
not rely on these two grounds, however, to uphold the exclusion of the notation on the bank statement. Instead we find a
more fundamental flaw in this evidence: this notation, unlike those in Benton's diaries, was not made for future reference
and reliance but was made in anticipation of IRS litigation. The defendants appear to admit this fact, and the trial judge
was informed of this. (Tr. 1363-69). As such prelitigation records, we hold that they lacked sufficient trustworthiness to
permit admissibility. Indeed, this case is not significantly distinguishable from Hartzog v. United States, 217 F.2d 706
(4th Cir. 1954), which was cited by the Advisory Committee Notes to Rule 803(6) as an example of insufficient
trustworthiness. In Hartzog the court held it was error to admit the worksheets of an IRS agent, deceased at the time of
trial, that had been prepared from his examination of the defendant's records in preparation for a tax-evasion
prosecution. The court explained the reasons for finding insufficient trustworthiness as follows:
These worksheets were made in preparation for this prosecution; they were Baynard's [the agent's] personal working
papers, were the product of his judgment and discretion and not a product of any efficient clerical system. There was no
opportunity for anyone . . . to tell when an error or misstatement had been made. These worksheets were not more than
Baynard's unsworn, unchecked version of what he thought [the defendant] Hartzog's records contained.
Id. at 710. The records made by Weber's accountant are no more trustworthy than those prepared by the agent in
Hartzog: they were prepared as a matter of his judgment and discretion; they were not produced as part of any regular
system; there was no reliance on these notations by the accountant or others to guard against error or misstatement. If
anything, the records in this case are less trustworthy since, unlike Hartzog where the agent examined records that the
defendant had prepared for his own use, these notations were the product of Weber's own representations for the
purposes of the audit, thereby furthering the possibility of misstatement. Accordingly, we hold that the trial court properly
exercised its discretion to exclude these records.38
PELL, Circuit Judge:
I concur in the portions of this opinion prepared by Judges Tone and Sprecher.

81 | P a g e

[595 F.2d 1353]

VII.
WEBER'S POLITICAL ACQUAINTANCES
Henry Weber, brother of Franklin Weber, called as a Government witness, was permitted to testify on direct examination
without objection that his brother Franklin was an acquaintance of Clyde Choate. He was then asked whether his
brother was an acquaintance of Paul Powell to which he also responded in the affirmative. An objection was made,
without any specificity, following the answer as to Powell. There was no motion to strike the answer and the "objection"
as such was overruled. No effort was made at the time to demonstrate to the trial judge any particular basis for the
objection.
Subsequently during redirect examination Weber moved for a mistrial on the basis of the Powell matter because "[i]t
was highly prejudicial and has no relation whatsoever to this case." The court in denying the motion, properly from our
examination of the record, observed that:
the reason I let that in is that you cross examined several witnesses about whether or not there was any reason to
believe Mr. Weber had any political connections, whether it was credible to believe that he knew anybody, and there
again, that is something you opened up.
Without specific reference to Powell, Weber again moved for a mistrial following final argument. He now says that which
he didn't say to the court specifically that on the basis of Fed.R.Evid. 404(b) the testimony as to Powell was improper
and prejudicial in the light of widely-circulated publicity of wrongdoing on the part of Powell when he was Secretary of
State of Illinois. Certainly in any trial and particularly in a complex trial involving numerous defendants such as the
present case, a lawyer should make clear to the trial judge the exact nature of the claimed prejudice, which was not
done here. Even, however, if we assume what probably was a fact that the notoriety given to the Powell case some
seven years earlier was such as to make it clear why Weber's attorney did not want his client linked with Powell, we
agree here with the district court that the door had been opened. Weber, not the Government, portrayed political
associations, which he sufficiently indicated he did not have, as a unique requirement for accomplishing that with which
Weber is charged.
For the court to admit relevant evidence in rebuttal on the subject was well within its discretion. See United States v.
Eliano, 522 F.2d 201 (2d Cir. 1975); United States v. Jones, 438 F.2d 461 (7th Cir. 1971). C. Wright and K. Graham,
Federal Practice & Procedure 5241. The purpose of Rule 404(b) is to prevent "the use of alleged particular acts
ranging over the entire period of the defendant's life [making] it impossible for him to be prepared to refute the charges,
any or all of which may be mere fabrications." 2 J. Weinstein, Evidence 405[04], at 405-39, quoting Wigmore,
Evidence 194. The defendant focused the proof on this issue and cannot complain of surprise if evidence of his
political associations was introduced.

from that country at the first of his two appearances before the grand jury. The court would not admit the testimony on
direct examination, however, on the basis that the trial jury might unfairly infer that the defendant had somehow been
responsible for his brother's falsehoods. When cross-examined by the defendant, Henry explained that because he was
by coincidence going to Europe, he negotiated the letters of credit as a favor to his brother. Henry also testified that the
defendant had
[595 F.2d 1354]
told him the letters "covered sale commissions for oil or Arabian interest or something." The trial court then permitted the
Government to introduce the grand jury testimony on redirect examination, and the defendant argues that the evidence
still created the prejudical impression that Franklin Weber forced his brother to testify falsely.
Weber's argument that the admission of this evidence was a prejudicial linking of the brothers Weber, however, shifts
the focus from the basis on which the evidence was properly admitted. As the district court pointed out there need be no
connection between Franklin Weber and the giving of the false testimony to the grand jury for that testimony to be
admissible.
The trial court properly admitted the statement as nonhearsay, Fed.R.Evid. 801(c); see Anderson v. United States, 417
U.S. 211, 219-21, 94 S.Ct. 2253, 41 L.Ed.2d 20 (1974), to rebut the theory of the defense raised by the defendant
during cross-examination. During cross-examination, the defendant did not attempt to rebut the Government's showing
on direct examination that Henry Weber negotiated the letters of credit. The defendant instead attempted to impose
upon the transactions the appearance of innocence. Once the defendant, again opening a door, attempted to create this
impression, the testimony became significant as rebuttal merely because it was given, and not for its truth.39 The grand
jury testimony, viewed with other admissible evidence showing that it was false, tended to establish that Henry Weber
was aware that he was involved in improper transactions. See id. at 220.
In his reply brief, Weber argues that the Government has resorted to mere rules of impeachment to justify the
introduction of the grand jury testimony. It is true that as a secondary justification the Government, citing Fed.R.Evid.
607, argues that it could properly impeach its own witness, although Weber does not argue otherwise.40 Although the
impeachment aspect is one which enters the present picture, this aspect appears neither to be the prime thrust of the
Government's position nor the basis on which the trial court admitted the evidence. As the trial judge pointed out when
the impeaching testimony was being discussed, the cross-examination by Franklin Weber was designed expressly to
bring out that this was a routine transaction that the witness was conducting for his brother, nothing was wrong with it
and there was no reason to suspect it. The judge then pointed out:
You didn't have to do that. I had earlier ruled that this [impeaching testimony] would not be admissible. Having opened it
up, I think the Government is now entitled to show that two weeks after he returned from Liechtenstein and I hadn't
realized that it was that soon that he appeared before the Grand Jury this witness said he had never been to
Liechtenstein.

VIII.

We agree with the district judge that the evidence was properly admissible through the open door.

HENRY WEBER'S GRAND JURY TESTIMONY

IX.

Franklin Weber also objects to the admission of his brother Henry's grand jury testimony at trial. Henry Weber testified
on direct examination that he went to Vaduz, Liechtenstein, to negotiate two letters of credit given to him by the
defendant. During the course of the direct examination, the Government attempted to introduce Henry Weber's
inconsistent grand jury testimony that he had never gone to Liechtenstein, testimony given two weeks after his return

DENIAL OF EFFECTIVE ASSISTANCE OF COUNSEL

82 | P a g e

A second aspect of the Swiss letters and Henry Weber's various connections therewith is the basis for a claim that
Franklin Weber was denied effective assistance of

[595 F.2d 1355]

counsel. The gist of the claim is that evidence pertaining to the Swiss letters in addition to that discussed in Part VIII of
this opinion not only further linked Franklin Weber with his brother's first grand jury testimony but also constituted such a
challenge to the integrity of Franklin Weber's trial lawyer as to deny the defendant effective assistance of counsel.
Specifically, the proof to which the objection is directed is the testimony, presented during the Government's rebuttal, of
Assistant United States Attorney Michael O'Brien, who had conducted the preliminary grand jury investigation. The
testimony described the following sequence of events: About a week after Henry Weber testified truthfully before the
grand jury on December 3, 1975, his second appearance, that he carried the letters of credit to Liechtenstein, Franklin
Weber's attorney had called Government counsel to report his client's possession of other letters of credit. During
closing argument, the prosecutor suggested, "Isn't it interesting that after Henry Weber has all this recollection, then
everybody is calling up and telling the Government about it, after the cat is out of the bag." The defendant argues that
this statement implied that defense counsel engaged in wrongdoing and therefore denied the defendant assistance of
counsel. This argument is completely without merit. The cases cited by the defendant, United States v. CandelariaGonzalez, 547 F.2d 291 (5th Cir. 1977), and Zebouni v. United States, 226 F.2d 826 (5th Cir. 1955), concerned
continuous derision of the defense attorney by the trial judge and are not in point. Furthermore, we have difficulty seeing
how this testimony and final argument disparaged defense counsel. The Government's questioning and argument were
obviously for the purpose of rebutting the defendant's exculpatory evidence that Franklin Weber had not learned of the
grand jury investigation until "very recently," and that he had been suspicious of the purpose behind the letters of credit,
and that he therefore directed his attorney to notify the United States Attorney that he possessed more letters of credit.
We find no error in the admission of the rebuttal evidence. It was for the jury to draw such inferences as the evidence
properly supported on the issues to be determined by the jury. The admission of this evidence properly bearing on what
amounted to an assertion of a defense does not by any stretch of the imagination so impugn the defendant's attorney as
to make his assistance ineffective to the prejudice of his client. We find no suggestion in the record that the attorney had
the information with respect to the letters any sooner than he provided the information to the Government.
X.
JUDGE'S COMMENT DURING WEBER'S TESTIMONY
Franklin Weber finally argues that a comment by the trial judge during his testimony constitutes reversible error. The
defendant testified, "I can swear that I did not see Mr. Benton give him anything . . . ." The trial judge then said in the
presence of the jury, "that is what you are doing in everything you say. You understand that." Thereafter the matter was
brought to the attention of the judge by way of a motion for a mistrial in which it was claimed that Weber's credibility was
seriously depreciated in the eyes of the jury. The court immediately stated that the remark was not intended in any such
way and offered to make that clear to the jury.
The judge did fully explain to the jury that in reflecting upon the matter he thought he should not have made the
statement and that he in no way intended to reflect or comment on Weber's testimony or indicate any attitude
whatsoever about the testimony. The judge also in final instructions made it clear that any comment by the court was not
intended to invade the jury's province to decide the facts.
Weber, while not challenging the completeness of the court's curative instruction, argues that it did nothing to heal an
incurable

situation, stating that "A placebo cannot cure a terminal condition." In candor, we regard this hyperbolic characterization
as a desperate bit of straw grabbing. In the first place we would have had difficulty even absent the curative instruction
in reading this remark as any indication that the judge was expressing disbelief in the defendant's testimony. The judge,
however, made it abundantly clear, if there had been any doubt, by his curative instruction that there was no reflection
on the witness's credibility. In any event, this was an isolated incident in a long and complex trial. Weber testified for two
full days during which the jury had ample opportunity to formulate its opinion of his credibility without regard to what was
at most an oblique passing remark by the judge. Courts generally, and properly, decline to reverse in comparable
situations. See, e. g., United States v. Cardall, 550 F.2d 604, 606 (10th Cir. 1976), cert. denied, 434 U.S. 841, 98 S.Ct.
137, 54 L.Ed.2d 105 (1978); Gordon v. United States, 438 F.2d 858, 862-63 (5th Cir.), cert. denied, 404 U.S. 828, 92
S.Ct. 63, 30 L.Ed.2d 56 (1971); United States v. Allen, 431 F.2d 712, 712-13 (9th Cir. 1970); United States v. Wilkins,
422 F.Supp. 1371 (E.D.Pa. 1976), aff'd sub nom. Appeal of Smith, 547 F.2d 1164 (3d Cir. 1976), 547 F.2d 1166 (3d Cir.
1976), 559 F.2d 1210 (3d Cir. 1977).
As the Supreme Court stated in United States v. Glasser, 315 U.S. 60, 83, 62 S.Ct. 457, 471, 86 L.Ed. 680 (1942):
[An] examination of the record as a whole leads to the conclusion that the substantial rights of the petitioners were not
affected. The trial was long and the incidents relied on by petitioners few. We must guard against the magnification on
appeal of instances which were of little importance in their setting.
XI.
SUFFICIENCY OF EVIDENCE AS TO EDWIN BULL
The defendant Edwin Bull argues that the evidence against him was insufficient to sustain a conviction for conspiracy
because of an absence of evidence showing that he had knowledge of the illegal purposes of the conspiracy. He argues
that the statements of co-conspirators connecting him to the conspiracy were improperly admitted against him, and that
if these inadmissible statements had been excluded, his conviction could not stand.
Bull's theory of defense was that he was merely a "friendly and accommodating" businessman who earned a finder's fee
and a subcontract by introducing the Ingrams to the contract opportunities available at the Sanitary District. Especially
damaging to this defense, however, was testimony admitted at trial of conversations between Bull's alleged coconspirators concerning Bull's role in the conspiracy. Benton testified, for example, that prior to receiving the contract,
Ingram was having trouble generating sufficient cash to meet the demands of Sanitary District officials. When Weber
learned of this problem, he instructed Benton to write a check for $25,000 (the amount then demanded) payable to "Mr.
Bull's company, Bull Towing Company, and that he and Mr. Bull would handle this check and convert it into cash and
take care of the staff of the Sanitary District." Bull argues that without this statement the evidence merely shows that he
deposited a check from Ingram for $25,000 in the No. 3 Bull Towing account and drew a counter-check for the same
amount and received cash. Bull also declared this sum on his corporate and personal income tax returns and paid the
necessary taxes. According to Bull's brief, "[t]here is not a scintilla of evidence that any of these monies reached anyone
else." We hold that the co-conspirators' statements connecting Bull to the conspiracy were admissible under Fed.R.
Evid. 801(d)(2)(E) and that the evidence against Bull was adequate to sustain the conviction.
Rule 801(d)(2)(E) provides that statements of a co-conspirator made during the course of and in furtherance of a
conspiracy are not hearsay. In United States v. Santiago, 582 F.2d 1128 (7th Cir. 1978), we held that the trial court alone
should decide, as a
[595 F.2d 1357]

[595 F.2d 1356]

83 | P a g e

question of competence under Rule 104(a), the preliminary question of whether the proponent has submitted sufficient
proof that there was a conspiracy before admitting a co-conspirator's statement under Rule 801(d)(2)(E). For the
statement to be admissible, we held that this preliminary showing must satisfy the preponderance of the evidence
standard, and that the trial court's determination of admissibility is final as to admissibility.

Those are the two questions, and let's just assume, generally speaking, that a jury in a hypothetical case finds
Defendant B to have been a member of the conspiracy. All right, then and only then are the statements and actions of
his alleged co-conspirators admissible against him. Provided they are acts and statements which the jury finds were
committed in furtherance of the objectives of the conspiracy.

The proceedings below, however, took place prior to our decision in Santiago, at a time when there were ambiguities in
the law about who was to decide co-conspirator preliminary questions and by what standards. See generally, 1 J.
Weinstein, Evidence 104[05]. In Santiago we noted that in this circuit the former standard for determining the
admissibility of co-conspirators' statements committed the question to both judge and jury. The trial court would admit
the statement if the proponent made a prima facie showing, on the basis of evidence other than the statement, that
there had been a conspiracy. The jury, however, was instructed not to consider the statement against another defendant
unless they found, beyond a reasonable doubt, that the evidence other than the statement showed that a conspiracy
existed and that the other defendant was a member of the conspiracy. See also United States v. Rizzo, 418 F.2d 71 (7th
Cir. 1969), cert. denied, 397 U.S. 967, 90 S.Ct. 1006, 25 L.Ed.2d 260 (1970); United States v. Santos, 385 F.2d 43 (7th
Cir. 1967), cert. denied, 390 U.S. 954, 88 S.Ct. 1048, 19 L.Ed.2d 1148 (1968).

So, to recapitulate, question one, was there a conspiracy? Question two, was Defendant B a member of that
conspiracy? Question three, as to any acts or statements of an alleged co-conspirator in considering whether you are
going to consider that against Defendant B, was that act or statement committed in furtherance of the common
conspiracy?

The trial court in this case proceeded substantially according to the prior standard, described in Santiago.41 Bull,
however, relying on Santiago language, which, of course, was not available to the trial judge here, seizes upon a part of
the court's instructions given during the course of the trial in connection with the admission of testimony of statements of
alleged co-conspirators. It is true that the judge did say that the jury could consider such statements on the question of
whether a conspiracy existed. Bull cites us to criticism in Santiago of "the view that the existence of a conspiracy could
be proved by the very hearsay statement for which admission is sought." 582 F.2d at 1133 n. 11. That was done here,
he argues, and constituted "boot-strapping" proof which had been condemned by earlier cases.
This argument however, taking language of the instructions out of context, ignores the clear and explicit admonitions of
the court during the course of the trial that as to any particular charged co-conspirator it was essential that he be proved
a participant in the conspiracy by independent evidence before statements of others could be considered on the
question of his liability.
Thus, on the first occasion during the trial that the subject was addressed, which was early in the trial, the judge
instructed as follows:
There are two fundamental questions that you have to decide in regard to the conspiracy count of the indictment. The
first of those questions is what is the conspiracy that is alleged by the indictment to have existed? Was there such a
conspiracy? On that question you consider all of the evidence that I allow in and you make up your minds at the
conclusion of the case as to whether a conspiracy, as alleged in the indictment, has been shown to exist as between
somebody.
[595 F.2d 1358]
The second question is and it is eight separate questions here was this particular defendant shown to have been a
member of that conspiracy. On that second question which you must answer in regard to each defendant, only those
acts of that particular defendant should be considered to answer that question. You can't decide that Defendant B was a
member of the conspiracy, if you find there has been a conspiracy, on the basis
of something Defendant A said. It has to be on the basis of what you find Defendant B said and did.

84 | P a g e

Only if you answer all three of those questions in the affirmative can you consider this act or statement of, say,
Defendant A against Defendant B.
On analysis, all that the district court was really saying as to the establishment of a conspiracy was as follows: If there
was testimony as to a conversation between B and C which reflected an agreement to violate the law, this testimony
would be admissible as to B and C and would, if believed by the jury, tend to establish a conspiracy as to B and C. If
during the course of the conversation either B or C had spoken of A's participation this would not have been proof of A's
participation unless and until it had already been established by independent evidence, other than the statements of coconspirators, that A was a participant.
While the quoted portion of the instructions above was perhaps repetitive, and we note its substance as to the necessity
for independent evidence as to any particular defendant becoming a conspiracy member was repeated thereafter, it is
evident that the trial judge was attempting to make absolutely clear to the jury by repetitive emphasis that the
statements of others could not be considered against a defendant for finding him to be a participant in a conspiracy
unless his membership had been otherwise independently established. From the record we regard this attempt by the
judge to have been successful.
In sum, we fail to see any prejudice to Bull. The instructions on conspiracy as in the case of all instructions must be
considered in the whole complex of instructions, and it was made perfectly clear to the jury by those instructions that
even though a conspiracy had been established by all of the evidence which the court had admitted, the jury could not
find Bull guilty as a conspirator unless his membership in the conspiracy had been established by independent evidence
other than the statements of co-conspirators.
Further, and in any event on the record in this case, we are firmly convinced that apart from any statements there was
overwhelming independent evidence sufficient to show the existence of a conspiracy. If there had been any error in the
instruction it would have been harmless. Fed.R.Evid. 103(a); Williams v. United States, 119 U.S.App.D.C. 190, 338 F.2d
530 (1964).
Bull disagrees that there was independent evidence linking him to the conspiracy and asserts that the co-conspirators'
statements were therefore not admissible against him. As we have said the trial court instructed the jury that it must find
beyond a reasonable doubt and on the basis of independent evidence that Bull was a member of the conspiracy before
it could consider co-conspirator statements against Bull.
In reviewing the jury's determination of the sufficiency of the independent evidence linking Bull to the conspiracy, we do
not weigh the evidence or determine the credibility of witnesses. We will affirm the jury's finding if there is substantial
evidence, viewed in the light most favorable to the government, to support it, Glasser v. United States, 315 U.S. 60, 80,
62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Buschman, 527 F.2d 1082, 1085 (7th Cir. 1976), and we therefore
turn to an examination of that evidence.

[595 F.2d 1359]

Robert Howson, an Ingram Contractors, Inc. Vice President, testified that Bull came to New Orleans in March 1971 and
told him that for a southern contractor like Ingram to get the Sanitary District contract, a political contribution would be
necessary. Benton testified that Bull brought Benton and Weber together for a meeting later that month, and that the day
after this meeting, Bull told Benton that "if [Benton] agreed with the discussion with Mr. Weber, he felt Ingram would get
this contract, there would be no problem, and that he expected to receive $100,000 and Mr. Weber's group $200,000."
There was evidence that Bull deposited a $25,000 check from Ingram, and withdrew the same amount in cash. Although
Bull declared the amount on his taxes, there was also testimony that Bull insisted to Benton that his finder's fee from
Ingram include reimbursement for the taxes he paid on the check drawn to his company. From this testimony, the jury
certainly could infer that Bull did not keep the $25,000, and from Bull's insistence that Ingram be responsible for the
taxes, the jury could infer that Bull's laundering of the check was a favor for Ingram, to whom Bull had earlier suggested
the need for political contributions in exchange for a contract. The testimony also showed that Bull's involvement in the
bribery scheme continued. When insisting on an increase in his subcontract rates, Bull was reminded by Benton in
January 1975 "that this contract extension was a similar situation with the original contract and that Ingram did not retain
all of the increase that would be reflected between the various unit prices in the two agreements."
We have already found that the evidence that a conspiracy existed was overwhelming. In United States v. Robinson,
470 F.2d 121 (7th Cir. 1972), we noted that once the existence of a common scheme is established, very little may be
required to show beyond a reasonable doubt that a particular defendant became a party. See also United States v.
Harris, 542 F.2d 1283 (7th Cir. 1976), cert. denied, 430 U.S. 934, 97 S.Ct. 1558, 51 L.Ed.2d 779 (1977). From the
evidence of Bull's independent acts and statements, the jury was entitled to find beyond a reasonable doubt that Bull
was a member of this conspiracy, and the jury therefore was entitled to use the statements of other conspirators against
him.42 The discriminating conclusions of guilt and innocence returned by the jury in this complex case demonstrate that
the jury studied the evidence with great care. See United States v. Kaufman, 429 F.2d 240, 244 (2d Cir.), cert. denied,
400 U.S. 925, 91 S.Ct. 185, 27 L.Ed.2d 184 (1970). We decline to disturb their verdict, holding that the independent
evidence of Bull's knowing participation in the conspiracy was sufficient to support the jury's use of the co-conspirators'
statements against him, and that with such evidence there is no merit in his claim of insufficiency.
XII.
BULL'S CLAIM OF PROSECUTORIAL MISCONDUCT
Edwin Bull also argues that during its closing argument, the Government raised for the first time an unfounded inference
that he bribed someone in the Illinois Commerce Commission to procure a Certificate of Public Necessity and
Convenience for
[595 F.2d 1360]
Ingram. Specifically, during closing arguments the Government attorney made the following statement:
On July 27, 1971, Frank Weber and Ed Bull went through another series of transactions to generate cash very similar to
what they did in April, to generate the $25,000. This time the amount involved was $20,000.
Frank Weber made out a Southwest Expressways' check for $20,000, payable to Bull Towing. Bull took it to the bank,
deposited it into the Bull Towing Company account, and wrote a check in that amount made payable to himself and
received $20,000 in cash.
85 | P a g e

This occurred on July 27, ladies and gentlemen, the day before Ingram received his Commerce Commission Certificate
of Registration.
During rebuttal argument, the Government added:
Would you put up Government Exhibit 1-12(A).
That is a check from Southwest Expressways to No. 3 Bull Towing dated July 27, 1971, the same day as Government
Exhibit 1-12(D) was issued. It is again a check to Ed Bull, and as the evidence indicates, Mr. Bull left the bank with
$20,000. Benton had nothing to do with this transaction, but as you have seen from the notes that Mr. Weber wrote,
there was apparently some sort of problem at the ICC, Illinois Commerce Commission.
It just so happens that the following day, Ingram is granted their Certificate of Convenience and Necessity by the Illinois
Commerce Commission. Well, the bankers and those documents are not ghosts, and they begin to add up.
Bull argues that this suggestion constituted an unconstitutional amendment of the indictment and that it prejudiced
unfairly the preparation of his defense. The defendant concedes that the evidence shows he converted a $20,000 check
from Franklin Weber to cash on July 27, 1971, but argues that absolutely no evidence supports the implication in the
Government argument that he bribed the Commerce Commission.
Although the prosecution, of course, must never refer to matters with no basis in the evidence, United States v. Morris,
568 F.2d 396 (5th Cir. 1978); United States v. Meeker, 558 F.2d 387 (7th Cir. 1977), the prosecutor may in argument
suggest reasonable inferences from the evidence already admitted. United States v. Jones, 157 U.S.App.D.C. 158, 482
F.2d 747 (1973). Because of the secret nature of the crime, conspiracy is especially subject to proof by circumstantial
evidence. We decline to require the prosecutor to suggest to the jury only conclusions supported by direct evidence.
During the trial there was evidence that the Certificate of Public Necessity and Convenience was granted to Ingram the
day after Bull converted the check to cash. Government Exhibit 11-1, a memo made by Weber, also admitted in
evidence, indicated that Weber had made payments to the Commerce Commission on behalf of Ingram. On direct
examination, Weber testified that he gave Bull the $20,000 check as a payment for a dredge, and during crossexamination the Government confronted Weber with the connection between the memo, the laundered check, and the
issuance of the Certificate. Bull did not object to this line of questioning.
These matters admitted in evidence were available to Bull in time to prepare his rebuttal. The conversion of the $20,000
check to cash was one of the overt acts charged in the conspiracy indictment. The documents connected with this line
of proof were turned over to Bull's attorney ten months prior to the trial. Bull's argument that this closing statement
unfairly prejudiced his defense must therefore fail.
Our examination of the Government's argument and the evidence supporting it also leads us to conclude that the
inference created was that Weber, not Bull, bribed the Commerce Commission. The Government therefore did not stray
beyond the confines of the scheme alleged in the indictment, which describes Bull in paragraphs
[595 F.2d 1361]
21 and 27 as having been a knowing conduit for the bribery funds. Furthermore, paragraphs 21 and 27 of the indictment
describe in broad language the objects of the bribery scheme as "public officers and employees," so that proof of bribes
to Illinois Commerce Commission officials was entirely within the scope of the scheme alleged. Bull's argument that any

proof involving officials from agencies other than the Sanitary District amended the indictment is therefore without merit.
See Stirone v. United States, 361 U.S. 212, 218-19, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960).
XIII.
CLAIMED ERROR OF INSTRUCTIONS ON TRAVEL ACT
The defendant Frederick Ingram challenges the portion of the court's instructions pertaining to the counts charging
violations of 18 U.S.C. 1952 (the "Travel Act") insofar as the jury was told that under the Travel Act a defendant need
not know or reasonably foresee that the facilities of interstate commerce will be used or that someone will travel in
interstate commerce in order to be guilty under the Travel Act. The authority in this circuit is that neither the language
nor the purpose of the Travel Act compels this showing of knowledge on the part of each co-conspirator. United States
v. Peskin, 527 F.2d 71 (7th Cir. 1975), cert. denied, 429 U.S. 818, 97 S.Ct. 63, 50 L.Ed.2d 79 (1976). See United States
v. Feola, 420 U.S. 671, 95 S.Ct. 1255, 43 L.Ed.2d 541 (1975). The defendant has offered no persuasive reason for a
different rule. The use of interstate facilities merely provides the basis for federal jurisdiction. United States v. Peskin,
527 F.2d at 78; United States v. Bursten, 560 F.2d 779, 783-84 (7th Cir. 1977).
What we have said herein no way indicates that there is not a necessity for interstate travel or the use of an interstate
facility. The court did properly instruct the jury that the Government had to prove:
(1) that someone traveled in interstate commerce, or used an interstate facility in furtherance of the bribery scheme; (2)
that a person who caused the travel or use did so with intent to facilitate the bribery scheme; (3) that a member of the
scheme thereafter performed or caused to be performed acts to promote the carrying on of the bribery scheme; and (4)
that the particular defendant under consideration "was a knowing and willful participant in the bribery scheme at the time
of the interstate travel or use of the interstate facility and at the time the subsequent act or acts took place."
The fact that Frederick Ingram did not travel interstate or use interstate facilities or that he may not have known that
others in the bribery scheme would do so is immaterial.
The judgments accordingly are affirmed.
AFFIRMED.

86 | P a g e

United States of America, Plaintiff-appellee, v. Ana Luisa Gordon-nikkar, Defendant-appellant, 518 F.2d 972 (5th Cir.
1975)Annotate this Case
U.S. Court of Appeals for the Fifth Circuit - 518 F.2d 972 (1975)
Sept. 5, 1975
Lewis S. Kimler, Miami, Fla. (court appointed), for defendant-appellant.
Robert W. Rust, U. S. Atty., Miami, Fla., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Florida.
Before COLEMAN, AINSWORTH and SIMPSON, Circuit Judges.

privilege to extend it so as to protect communications designed to frustrate justice by committing other crimes to conceal
past misdeeds.
4
Appellant next argues that the trial court erroneously refused to quash the petit jury venire as requested on the ground
that the exclusion therefrom of resident aliens deprived her of her right to trial before a jury representing a fair crosssection of the community. The right and duty to act as grand or petit jurors is presently reserved to citizens. "Any citizen
of the United States . . . is competent to serve as a grand or petit juror." 28 U.S.C. 1861 (emphasis added). See also
28 U.S.C. 1865. This statutory mandate serves to exclude otherwise eligible resident aliens from jury service. All
defendants at the trial below were of Cuban origin. Defense counsel alleged to the trial court that in Miami, where the
trial took place, 30 per cent of the city's population are resident aliens, mostly of Cuban descent. It is contended that the
exclusion of otherwise eligible resident aliens under these circumstances deprived appellant of a fair trial.

AINSWORTH, Circuit Judge:

1
Appellant, Ana Gordon-Nikkar, was convicted after a trial by jury on all three counts of an indictment charging her with
conspiracy to possess with intent to distribute approximately four kilograms of cocaine, and the substantive charges of
possession with intent to distribute and distribution of the cocaine. 21 U.S.C. 841(a)(1), 846. On appeal, appellant
contends her conviction should be reversed because the district court permitted a Government witness, Brenda
Marchand, to give testimony regarding allegedly privileged conversations between appellant's attorney and his clients,
and because the trial court denied appellant's motion to quash the jury panel on account of the exclusion of resident
aliens from grand and petit juries. We affirm.
2
Brenda Marchand was charged as a codefendant with the crimes for which appellant was convicted. Marchand
subsequently pled guilty on Count I of the indictment and testified at trial for the Government. Prior to entering her plea,
Marchand had two meetings in the office of appellant's attorney, Mr. Estrumsa.1 On each of these occasions, several of
the codefendants were present. Marchand, however, was not a client of Estrumsa, and it is unclear whether all the other
persons in these meetings were Estrumsa's clients. Of the two conversations related by Marchand, the second was the
subject of thorough cross-examination by Estrumsa. The second conversation involved Estrumsa's alleged
recommendation that Marchand leave the country and go to Venezuela. On redirect, the Government inquired, over
defense objection, into the substance of the conversation during the first meeting. Marchand testified that at this
meeting the participants, at Mr. Estrumsa's suggestion, agreed to give perjured cover-up testimony at trial to the effect
that none of them had possessed the cocaine, but instead merely happened to be at a party where the cocaine was
discovered.
3
The principal issue in this regard is whether the statements in attorney Estrumsa's office were protected by the attorneyclient privilege.2 There were at least five persons present at Estrumsa's office on this occasion; at least one of the
persons, Brenda Marchand, and perhaps others, were not clients of Mr. Estrumsa. A communication divulged to
"strangers" or outsiders can scarcely be considered a confidential communication between attorney and client. See In re
Grand Jury Proceedings, 5 Cir., 1975,517 F.2d 666; United States v. Blackburn, 5 Cir., 1971, 446 F.2d 1089, 1091;
International Business Machine Corp. v. Sperry Rand Corp., D.Del., 1968,44 F.R.D. 10, 12; United States v. United
Shoe Machinery Corp., D.Mass., 1950, 89 F.Supp. 357, 358; 8 Wigmore on Evidence 2311 (McNaughton Rev.1961).
Therefore, this communication is not protected by the attorney-client privilege. But even if it appeared that the
communication in question were otherwise privileged (i. e., that the communication was considered confidential despite
the presence of a stranger), the testimony was nonetheless admissible. The conversations in question dealt with plans
to commit perjury so as to hide the criminal activity of appellant and others. It is beyond dispute that the attorney-client
privilege does not extend to communications regarding an intended crime. See 8 Wigmore on Evidence 2298
(McNaughton Rev.1961) and cases cited; Pollock v. United States, 5 Cir., 1953, 202 F.2d 281, 286. The policy
underlying the attorney-client privilege is to promote the administration of justice. It would be a perversion of the
87 | P a g e

5
It is true that the Supreme Court has held that the Sixth Amendment right to an impartial jury encompasses a
fundamental right to trial by a jury which is a truly representative cross-section of the community. Taylor v. Louisiana,
419 U.S. 522, 95 S.Ct. 692, 42 L.Ed.2d 690 (1975); see Peters v. Kiff, 407 U.S. 493, 498, 92 S.Ct. 2163, 2166, 33
L.Ed.2d 83 (1972); Glasser v. United States, 315 U.S. 60, 86, 62 S.Ct. 457, 472, 86 L.Ed. 680 (1942).3 Despite this
requirement, however, "it has never been thought that federal juries must be drawn from a cross-section of the total
population without the imposition of any qualifications." United States v. McVean, 5 Cir., 1971, 436 F.2d 1120, 1122, cert.
denied, 404 U.S. 822, 92 S.Ct. 45, 30 L.Ed.2d 50 (emphasis in original). Thus, if citizenship is a reasonable qualification
for jury duty and resident aliens may properly be excluded from jury service, no Sixth Amendment violation results from
such an exclusion. The "truly representative cross-section" requirement encompasses only individuals qualified to serve
as jurors. Our inquiry is thus whether the Government can constitutionally impose citizenship as a qualification for jury
service.
6
In a series of cases as recent as 1973, the Supreme Court has held that aliens are protected by the Equal Protection
Clause of the Fourteenth Amendment, and that classifications based on alienage are inherently suspect and subject to
close judicial scrutiny. In re Griffiths, 413 U.S. 717, 93 S.Ct. 2851, 37 L.Ed.2d 910 (1973); Sugarman v. Dougall, 413
U.S. 634, 93 S.Ct. 2842, 37 L.Ed.2d 853 (1973); Graham v. Richardson, 403 U.S. 365, 91 S.Ct. 1848, 29 L.Ed.2d 534
(1971); Takahashi v. Fish and Game Commission,334 U.S. 410, 68 S.Ct. 1138, 92 L.Ed. 1478 (1948); cf. Truax v. Raich,
239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131 (1915); Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220 (1886).
While all the previous cases involved challenges based on the Equal Protection Clause of the Fourteenth Amendment to
discrimination by states on the basis of alienage, the same analysis is applicable to the Due Process Clause of the Fifth
Amendment, which relates to classifications by the Federal Government. See Bolling v. Sharpe, 347 U.S. 497, 74 S.Ct.
693, 98 L.Ed. 884 (1953). If a classification is invalid under the Equal Protection Clause of the Fourteenth Amendment,
it is also invalid under the Due Process Clause of the Fifth Amendment. Johnson v. Robinson,415 U.S. 361, 363 n. 4, 94
S.Ct. 1160, 1164 n. 4, 39 L.Ed.2d 289 (1974); see Richardson v. Belcher, 404 U.S. 78, 81, 92 S.Ct. 254, 257, 30
L.Ed.2d 231 (1971). Because alienage is a suspect classification, the Federal Government must therefore demonstrate
that it has a compelling state interest in confining the selection of jurors to those who are citizens.
7
The precise issue before this court was considered in Perkins v. Smith, D.Md., 1974, 370 F.Supp. 134 (three-judge
court), appeal docketed,43 U.S.L.W. 3001 (U.S., June 21, 1974) (Docket No. 73-1915).4 In Perkins, the court held that
there was a compelling state interest in restricting jury service to citizens, and upheld the federal statutory scheme
excluding non-citizens from jury service. We agree with the court's conclusion that there was a compelling interest "in
ensuring that persons who serve as jurors are personally committed to the proper application and enforcement of the
laws of the United States" which therefore justifies the exclusion of aliens. Perkins v. Smith, supra, 370 F.Supp. at 142
(concurring opinion). The following discussion from Perkins is pertinent:

8
In maintaining the jury system as "the very palladium of free government" the states logically can anticipate that nativeborn citizens would be conversant with the social and political institutions of our society, the customs of the locality, the
nuances of local tradition and language. Likewise naturalized citizens, who have passed through the citizenship classes
sponsored by the Immigration and Naturalization Service, have demonstrated a basic understanding of our form of
government, history and traditions. There is no corresponding basis for assuming that resident aliens, who owe
allegiance not to any state or to the federal government, but are subjects of a foreign power, have so assimilated our
societal and political mores that an equal reliance could be placed on their performing as well as citizens the duties of
jurors in our judicial system.
9
The nature of the operation of juries makes it apparent that persons unfit for jury service can work a great deal of harm,
through inability or malice, to efficiency and fairness. Jury deliberations are perhaps the most secret form of decisionmaking in the nation; the means of persuasion used by jurors on each other are never revealed. A single juror who failed
to understand the import of the evidence being presented or who lacked any concern for the fairness of the outcome
could severely obstruct or distort the course of justice. A single persuasive and unprincipled juror could even direct the
course of justice into channels deliberately chosen for their deleterious effect on this country. We conclude, therefore,
that the state has a compelling interest in the restriction of jury service to those who will be loyal to, interested in, and
familiar with, the customs of this country.
10
Resident aliens by definition have not yet been admitted to citizenship. Until they become citizens, they remain in most
cases legally bound to the country of their origin. Nothing is to prevent their return to that country, or a move to yet a
third nation. It is true that many, if not most, aliens do intend to become citizens, and that their loyalty could probably be
counted upon. However, it is the process of filing for citizenship that establishes that loyalty; any attempt at prior
screening would undercut the efficiency and significance of existing procedures. Therefore, although the presumption
that all aliens owe no allegiance to the United States is not valid in every case, no alternative to taking citizenship for
testing allegiance can be devised, so that we conclude that the classification is compelled by circumstances, and that it
is justifiable.
11
370 F.Supp. at 138.
12
While we are satisfied that the Government has a compelling state interest sufficient to uphold the statute as
constitutional, there is another reason why aliens may be excluded from federal juries. Under Article I, section 8, clause
4 of the Constitution, Congress is granted the power "to establish an uniform Rule of Naturalization." This specific grant
of authority vests in Congress the plenary, unqualified power to determine which aliens shall be admitted to this country,
the period they may remain, and the terms and conditions of their naturalization. Graham v. Richardson, supra, 403 U.S.
at 377, 91 S.Ct. at 1854; Takahashi v. Fish and Game Comm'n, supra, 334 U.S. at 419, 68 S.Ct. at 1142; Hines v.
Davidowitz, 312 U.S. 52, 66, 61 S.Ct. 399, 403, 85 L.Ed. 581 (1941); see also Harisiades v. Shaughnessy,353 U.S. 72,
77 S.Ct. 618, 1 L.Ed.2d 652 (1957); United States ex rel. Knauff v. Shaughnessy, 338 U.S. 537, 70 S.Ct. 309, 94 L.Ed.
317 (1950).
13
The plenary authority to admit or exclude aliens necessarily permits Congress to place certain conditions on an alien's
right of entry or continued residence. Silverman v. Rogers, 1 Cir., 1970, 437 F.2d 102, 107, cert. denied, 402 U.S. 983,
91 S.Ct. 1667, 29 L.Ed.2d 149; see Perdido v. I.N.S., 5 Cir., 1969, 420 F.2d 1179, 1181. While resident aliens are
entitled to the full protection of this country's laws, until they obtain and maintain citizenship by naturalization they are
subject to the plenary authority of Congress' immigration and naturalization powers. Carlson v. Landon, 342 U.S. 524,
534, 72 S.Ct. 525, 531, 96 L.Ed. 547 (1952). Thus, while most state classifications based on alienage are inherently
88 | P a g e

suspect, Graham v. Richardson, In re Griffiths, Sugarman v. Dougall, Takahashi v. Fish and Game Comm'n, supra, the
same is not true of all such federal classifications where Congress' plenary authority in the field of immigration is
involved.
14
Although Congress may not single out aliens for discriminatory treatment in matters not related to the furtherance of its
naturalization responsibilities, Ramos v. United States Civil Service Comm'n, D.P.R., 1974,376 F.Supp. 361, 366 (threejudge court), Congress has the power to define reasonable prerequisites to an alien's exercise of the rights and duties of
citizenship. We believe that preventing resident aliens from serving as jurors is rationally related to Congress' legitimate
power to define the extent of resident aliens' rights prior to obtaining citizenship. Recently, the Supreme Court stated
that a state may deny to aliens the opportunity to participate in the electoral process because of a "State's historical
power to exclude aliens from participation in its democratic political institutions" and its "constitutional responsibility for
the establishment and operation of its own government," Sugarman v. Dougall, supra, 413 U.S. at 648, 93 S.Ct. at
2850-2851. If a state has the inherent power to deprive aliens of the right to vote, Congress, with its broad powers in
dealing with aliens, may validly require citizenship as a prerequisite to service on federal juries. Cf. Ramos v. United
States Civil Service Comm'n, supra, 376 F.Supp. at 367 n. 9; Perkins v. Smith, supra, 370 F.Supp. at 139 n. 1
(concurring opinion). Since Congress may validly exclude aliens from jury service, appellant was deprived of no Sixth
Amendment right by the failure to have resident aliens included in the grand or petit jury venires.
15
Affirmed.

UNITED STATES v. NOBLES, 422 U.S. 225 (1975)

422 U.S. 225
UNITED STATES v. NOBLES.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
No. 74-634.
Argued April 23, 1975.
Decided June 23, 1975.
During respondent's federal criminal trial, which resulted in a conviction, defense counsel sought to impeach the
credibility of key prosecution witnesses by testimony of a defense investigator regarding statements previously obtained
from the witnesses by the investigator. When the investigator was called as a witness, the District Court stated that a
copy of the investigator's report, inspected and edited by the court in camera so as to excise references to matters not
relevant to such statements, would have to be submitted to the prosecution for inspection at the completion of the
investigator's testimony. When defense counsel said he did not intend to produce the report, the court ruled that the
investigator could not testify about his interviews with the witnesses. The Court of Appeals, considering such ruling to be
reversible error, held that both the Fifth Amendment and Fed. Rule Crim. Proc. 16 prohibited the disclosure condition
imposed.
Held:
1. In a proper case, the prosecution, as well as the defense, can invoke the federal judiciary's inherent power to require
production of previously recorded witness statements that facilitate full disclosure of all the relevant facts. Here the
investigator's report might provide critical insight into the issues of credibility that the investigator's testimony would raise
and hence was highly relevant to such issues. Pp. 230-232.
2. The Fifth Amendment privilege against compulsory self-incrimination, being personal to the defendant, does not
extend to the testimony or statements of third parties called as witnesses at trial. In this instance the fact that the
statements of third parties were elicited by a defense investigator on respondent's behalf does not convert them into
respondent's personal communications, and requiring their production would in no sense compel respondent to be a
witness against himself or extort communications from him. Pp. 233-234.
3. Rule 16, whose language and history both indicate that it addresses only pretrial discovery, imposes no constraint on
the [422 U.S. 225, 226] District Court's power to condition the impeachment testimony of respondent's witness on the
production of the relevant portions of his report. The fact that the Rule incorporates the Jencks Act limitation shows no
contrary intent and does not convert the Rule into a general limitation on the trial court's broad discretion as to
evidentiary questions at trial. Pp. 234-236.
4. The qualified privilege derived from the attorney work-product doctrine is not available to prevent disclosure of the
investigative report, since respondent, by electing to present the investigator as a witness, waived the privilege with
respect to matters covered in his testimony. Pp. 236-240.
5. It was within the District Court's discretion to assure that the jury would hear the investigator's full testimony rather
than a truncated portion favorable to respondent, and the court's ruling, contrary to respondent's contention, did not
deprive him of the Sixth Amendment rights to compulsory process and cross-examination. That Amendment does not
confer the right to present testimony free from the legitimate demands of the adversarial system and cannot be invoked
as a justification for presenting what might have been a half-truth. Pp. 240-241.
89 | P a g e

501 F.2d 146, reversed.

POWELL, J., delivered the opinion of the Court, in which BURGER, C. J., and BRENNAN, STEWART, MARSHALL, and
BLACKMUN, JJ., joined, and in parts II, III, and V of which WHITE and REHNQUIST, JJ., joined. WHITE, J., filed a
concurring opinion, in which REHNQUIST, J., joined, post, p. 242. DOUGLAS, J., took no part in the consideration or
decision of the case.

Paul L. Friedman argued the cause for the United States. With him on the briefs were Solicitor General Bork, Acting
Assistant Attorney General Keeney, Deputy Solicitor General Frey, Sidney M. Glazer, and Ivan Michael Schaeffer.
Nicholas R. Allis argued the cause for respondent. With him on the brief was John K. Van de Kamp. *
[ Footnote * ] Briefs of amici curiae urging affirmance were filed by John J. Cleary for the California Public Defenders
Assn. et al., and by the Federal Public Defender of New Jersey. [422 U.S. 225, 227]
MR. JUSTICE POWELL delivered the opinion of the Court.
In a criminal trial, defense counsel sought to impeach the credibility of key prosecution witnesses by testimony of a
defense investigator regarding statements previously obtained from the witnesses by the investigator. The question
presented here is whether in these circumstances a federal trial court may compel the defense to reveal the relevant
portions of the investigator's report for the prosecution's use in cross-examining him. The United States Court of
Appeals for the Ninth Circuit concluded that it cannot. 501 F.2d 146. We granted certiorari, 419 U.S. 1120 (1975), and
now reverse.
I
Respondent was tried and convicted on charges arising from an armed robbery of a federally insured bank. The only
significant evidence linking him to the crime was the identification testimony of two witnesses, a bank teller and a
salesman who was in the bank during the robbery. 1 Respondent offered an alibi but, as the Court of Appeals
recognized, 501 F.2d, at 150, his strongest defense centered around attempts to discredit these eyewitnesses. Defense
efforts to impeach them gave rise to the events that led to this decision.
In the course of preparing respondent's defense, an investigator for the defense interviewed both witnesses and
preserved the essence of those conversations in a written report. When the witnesses testified for the prosecution,
respondent's counsel relied on the report in conducting their cross-examination. Counsel asked the bank [422 U.S. 225,
228] teller whether he recalled having told the investigator that he had seen only the back of the man he identified as
respondent. The witness replied that he did not remember making such a statement. He was allowed, despite defense
counsel's initial objection, to refresh his recollection by referring to a portion of the investigator's report. The prosecutor
also was allowed to see briefly the relevant portion of the report. 2 The witness thereafter testified that although the
report indicated that he told the investigator he had seen only respondent's back, he in fact had seen more than that and
continued to insist that respondent was the bank robber.
The other witness acknowledged on cross-examination that he too had spoken to the defense investigator.
Respondent's counsel twice inquired whether he told the investigator that "all blacks looked alike" to him, and in each
instance the witness denied having made such a statement. The prosecution again sought inspection of the relevant
portion of the investigator's report, and respondent's counsel again objected. The court declined to order disclosure at
that time, but ruled that it would be required if the investigator testified as to the witnesses' alleged statements from the
witness stand. 3 The [422 U.S. 225, 229] court further advised that it would examine the investigator's report in camera
and would excise all reference to matters not relevant to the precise statements at issue.

After the prosecution completed its case, respondent called the investigator as a defense witness. The court reiterated
that a copy of the report, inspected and edited in camera, would have to be submitted to Government counsel at the
completion of the investigator's impeachment testimony. When respondent's counsel stated that he did not intend to
produce the report, the court ruled that the investigator would not be allowed to testify about his interviews with the
witnesses. 4

It was therefore apparent to the trial judge that the investigator's report was highly relevant to the critical issue of
credibility. In this context, production of the report might substantially enhance "the search for truth," Williams v. Florida,
399 U.S., at 82 . We must determine whether compelling its production was precluded by some privilege available to the
defense in the circumstances of this case. [422 U.S. 225, 233]

The Court of Appeals for the Ninth Circuit, while acknowledging that the trial court's ruling constituted a "very limited and
seemingly judicious restriction," 501 F.2d, at 151, nevertheless considered it reversible [422 U.S. 225, 230] error. Citing
United States v. Wright, 160 U.S. App. D.C. 57, 68, 489 F.2d 1181, 1192 (1973), the court found that the Fifth
Amendment prohibited the disclosure condition imposed in this case. The court further held that Fed. Rule Crim. Proc.
16, while framed exclusively in terms of pretrial discovery, precluded prosecutorial discovery at trial as well. 501 F.2d, at
157; accord, United States v. Wright, supra, at 66-67, 489 F.2d, at 1190-1191. In each respect, we think the court erred.

III
A
The Court of Appeals concluded that the Fifth Amendment renders criminal discovery "basically a oneway street." 501
F.2d, at 154. Like many generalizations in constitutional law, this one is too broad. The relationship between the
accused's Fifth Amendment rights and the prosecution's ability to discover materials at trial must be identified in a more
discriminating manner.

II
The dual aim of our criminal justice system is "that guilt shall not escape or innocence suffer," Berger v. United States,
295 U.S. 78, 88 (1935). To this end, we have placed our confidence in the adversary system, entrusting to it the primary
responsibility for developing relevant facts on which a determination of guilt or innocence can be made. See United
States v. Nixon, 418 U.S. 683, 709 (1974); Williams v. Florida, 399 U.S. 78, 82 (1970); Elkins v. United States, 364 U.S.
206, 234 (1960) (Frankfurter, J., dissenting).

The Fifth Amendment privilege against compulsory self-incrimination is an "intimate and personal one," which protects
"a private inner sanctum of individual feeling and thought and proscribes state intrusion to extract self-condemnation."
Couch v. United States, 409 U.S. 322, 327 (1973); see also Bellis v. United States, 417 U.S. 85, 90 -91 (1974); United
States v. White, 322 U.S. 694, 698 (1944). As we noted in Couch, supra, at 328, the "privilege is a personal privilege: it
adheres basically to the person, not to information that may incriminate him." 7

While the adversary system depends primarily on the parties for the presentation and exploration of relevant facts, the
judiciary is not limited to the role of a referee or supervisor. Its compulsory processes stand available to require the
presentation of evidence in court or before a grand jury. United States v. Nixon, supra; Kastigar v. United States, 406
U.S. 441, 443 -444 (1972); Murphy v. Waterfront Comm'n, 378 U.S. 52, 93 -94 (1964) (WHITE, J., concurring). As we
recently observed in United States v. Nixon, supra, at 709:
"We have elected to employ an adversary system of criminal justice in which the parties contest all issues before a court
of law. The need to develop all relevant facts in the adversary system is both [422 U.S. 225, 231] fundamental and
comprehensive. The ends of criminal justice would be defeated if judgments were to be founded on a partial or
speculative presentation of the facts. The very integrity of the judicial system and public confidence in the system
depend on full disclosure of all the facts, within the framework of the rules of evidence. To ensure that justice is done, it
is imperative to the function of courts that compulsory process be available for the production of evidence needed either
by the prosecution or by the defense."
Decisions of this Court repeatedly have recognized the federal judiciary's inherent power to require the prosecution to
produce the previously recorded statements of its witnesses so that the defense may get the full benefit of crossexamination and the truth-finding process may be enhanced. See, e. g., Jencks v. United States, 353 U.S. 657 (1957); 5
Gordon v. United States, 344 U.S. 414 (1953); Goldman v. United States, 316 U.S. 129 (1942); Palermo v. United
States, 360 U.S. 343, 361 (1959) (BRENNAN, J., concurring in result). At issue here is whether, in a proper case, the
prosecution can call upon that same power for production of witness statements that facilitate "full disclosure of all the
[relevant] facts." United States v. Nixon, supra, at 709.
In this case, the defense proposed to call its investigator to impeach the identification testimony of the prosecution's
eyewitnesses. It was evident from cross-examination that the investigator would testify that each witness' recollection of
the appearance of the individual identified as respondent was considerably less clear at [422 U.S. 225, 232] an earlier
time than it was at trial. It also appeared that the investigator and one witness differed even as to what the witness told
him during the interview. The investigator's contemporaneous report might provide critical insight into the issues of
credibility that the investigator's testimony would raise. It could assist the jury in determining the extent to which the
investigator's testimony actually discredited the prosecution's witnesses. If, for example, the report failed to mention the
purported statement of one witness that "all blacks looked alike," the jury might disregard the investigator's version
altogether. On the other hand, if this statement appeared in the contemporaneously recorded report, it would tend
strongly to corroborate the investigator's version of the interview and to diminish substantially the reliability of that
witness' identification. 6
90 | P a g e

In this instance disclosure of the relevant portions of the defense investigator's report would not impinge on the
fundamental values protected by the Fifth Amendment. The court's order was limited to statements [422 U.S. 225, 234]
allegedly made by third parties who were available as witnesses to both the prosecution and the defense. Respondent
did not prepare the report, and there is no suggestion that the portions subject to the disclosure order reflected any
information that he conveyed to the investigator. The fact that these statements of third parties were elicited by a
defense investigator on respondent's behalf does not convert them into respondent's personal communications.
Requiring their production from the investigator therefore would not in any sense compel respondent to be a witness
against himself or extort communications from him.
We thus conclude that the Fifth Amendment privilege against compulsory self-incrimination, being personal to the
defendant, does not extend to the testimony or statements of third parties called as witnesses at trial. The Court of
Appeals' reliance on this constitutional guarantee as a bar to the disclosure here ordered was misplaced.
B
The Court of Appeals also held that Fed. Rule Crim. Proc. 16 deprived the trial court of the power to order disclosure of
the relevant portions of the investigator's report. 8 Acknowledging that the Rule appears to control pretrial discovery
only, the court nonetheless determined [422 U.S. 225, 235] that its reference to the Jencks Act, 18 U.S.C. 3500,
signaled an intention that Rule 16 should control trial practice as well. We do not agree.
Both the language and history of Rule 16 indicate that it addresses only pretrial discovery. Rule 16 (f) requires that a
motion for discovery be filed "within 10 days after arraignment or . . . such reasonable later time as the court may
permit," and further commands that it include all relief sought by the movant. When this provision is viewed in light of the
Advisory Committee's admonition that it is designed to encourage promptness in filing and to enable the district court to
avoid unnecessary delay or multiplication of motions, see Advisory Committee's Notes on Rule 16, 18 U.S.C. App., p.
4494, the pretrial focus of the Rule becomes apparent. The Government's right of discovery arises only after the
defendant has successfully sought discovery under subsections (a) (2) or (b) and is confined to matters "which the
defendant intends to produce at the trial." Fed. Rule Crim. Proc. 16 (c). This hardly suggests any intention that the Rule
would limit the court's power to order production once trial has begun. 9 Finally, the Advisory Committee's Notes
emphasize its pretrial character. Those notes repeatedly characterize the Rule as a provision governing pretrial
disclosure, never once suggesting that it was intended to constrict a district court's [422 U.S. 225, 236] control over
evidentiary questions arising at trial. 18 U.S.C. App., pp. 4493-4495.

The incorporation of the Jencks Act limitation on the pretrial right of discovery provided by Rule 16 does not express a
contrary intent. It only restricts the defendant's right of pretrial discovery in a manner that reconciles that provision with
the Jencks Act limitation on the trial court's discretion over evidentiary matters. It certainly does not convert Rule 16 into
a general limitation on the trial court's broad discretion as to evidentiary questions at trial. Cf. Giles v. Maryland, 386
U.S. 66, 101 (1967) (Fortas, J., concurring in judgment). 10 We conclude, therefore, that Rule 16 imposes no constraint
on the District Court's power to condition the impeachment testimony of respondent's witness on the production of the
relevant portions of his investigative report. In extending the Rule into the trial context, the Court of Appeals erred.
IV
Respondent contends further that the work-product doctrine exempts the investigator's report from disclosure at trial.
While we agree that this doctrine applies to criminal litigation as well as civil, we find its protection unavailable in this
case.
The work-product doctrine, recognized by this Court in Hickman v. Taylor, 329 U.S. 495 (1947), reflects the strong
"public policy underlying the orderly prosecution [422 U.S. 225, 237] and defense of legal claims." Id., at 510; see also
id., at 514-515 (Jackson, J., concurring). As the Court there observed:
"Historically, a lawyer is an officer of the court and is bound to work for the advancement of justice while faithfully
protecting the rightful interests of his clients. In performing his various duties, however, it is essential that a lawyer work
with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel. Proper
preparation of a client's case demands that he assemble information, sift what he considers to be the relevant from the
irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference. That is the
historical and the necessary way in which lawyers act within the framework of our system of jurisprudence to promote
justice and to protect their clients' interests. This work is reflected, of course, in interviews, statements, memoranda,
correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways - aptly
though roughly termed by the Circuit Court of Appeals in this case as the `work product of the lawyer.' Were such
materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten.
An attorney's thoughts, heretofore inviolate, would not be his own. Inefficiency, unfairness and sharp practices would
inevitably develop in the giving of legal advice and in the preparation of cases for trial. The effect on the legal profession
would be demoralizing. And the interests of the clients and the cause of justice would be poorly served." Id., at 510-511.
The Court therefore recognized a qualified privilege for [422 U.S. 225, 238] certain materials prepared by an attorney
"acting for his client in anticipation of litigation." Id., at 508. 11 See generally 4 J. Moore, Federal Practice 26.63 (2d
ed. 1974); E. Cleary, McCormick on Evidence 204-209 (2d ed. 1972); Note, Developments in the Law - Discovery, 74
Harv. L. Rev. 940, 1027-1046 (1961).
Although the work-product doctrine most frequently is asserted as a bar to discovery in civil litigation, its role in assuring
the proper functioning of the criminal justice system is even more vital. The interests of society and the accused in
obtaining a fair and accurate resolution of the question of guilt or innocence demand that adequate safeguards assure
the thorough preparation and presentation of each side of the case. 12
At its core, the work-product doctrine shelters the mental processes of the attorney, providing a privileged area within
which he can analyze and prepare his client's case. But the doctrine is an intensely practical one, grounded in the
realities of litigation in our adversary system. One of those realities is that attorneys often must rely on the assistance of
investigators and other agents in the compilation of materials in preparation for trial. It is therefore necessary that the
doctrine protect material prepared by agents for the attorney as [422 U.S. 225, 239] well as those prepared by the
attorney himself. 13 Moreover, the concerns reflected in the work-product doctrine do not disappear once trial has
begun. Disclosure of an attorney's efforts at trial, as surely as disclosure during pretrial discovery, could disrupt the
orderly development and presentation of his case. We need not, however, undertake here to delineate the scope of the
doctrine at trial, for in this instance it is clear that the defense waived such right as may have existed to invoke its
protections.

91 | P a g e

The privilege derived from the work-product doctrine is not absolute. Like other qualified privileges, it may be waived.
Here respondent sought to adduce the testimony of the investigator and contrast his recollection of the contested
statements with that of the prosecution's witnesses. Respondent, by electing to present the investigator as a witness,
waived the privilege with respect to matters covered in his testimony. 14 Respondent [422 U.S. 225, 240] can no more
advance the work-product doctrine to sustain a unilateral testimonial use of work-product materials than he could elect
to testify in his own behalf and thereafter assert his Fifth Amendment privilege to resist cross-examination on matters
reasonably related to those brought out in direct examination. See, e. g., McGautha v. California, 402 U.S. 183, 215
(1971). 15
V
Finally, our examination of the record persuades us that the District Court properly exercised its discretion in this
instance. The court authorized no general "fishing expedition" into the defense files or indeed even into the defense
investigator's report. Cf. United States v. Wright, 160 U.S. App. D.C. 57, 489 F.2d 1181 (1973). Rather, its considered
ruling was quite limited in scope, opening to prosecution scrutiny only the portion of the report that related to the
testimony the investigator would offer to discredit the witnesses' identification testimony. The court further afforded
respondent the maximum [422 U.S. 225, 241] opportunity to assist in avoiding unwarranted disclosure or to exercise
an informed choice to call for the investigator's testimony and thereby open his report to examination.
The court's preclusion sanction was an entirely proper method of assuring compliance with its order. Respondent's
argument that this ruling deprived him of the Sixth Amendment rights to compulsory process and cross-examination
misconceives the issue. The District Court did not bar the investigator's testimony. Cf. Washington v. Texas, 388 U.S.
14, 19 (1967). It merely prevented respondent from presenting to the jury a partial view of the credibility issue by
adducing the investigator's testimony and thereafter refusing to disclose the contemporaneous report that might offer
further critical insights. The Sixth Amendment does not confer the right to present testimony free from the legitimate
demands of the adversarial system; one cannot invoke the Sixth Amendment as a justification for presenting what might
have been a half-truth. Deciding, as we do, that it was within the court's discretion to assure that the jury would hear the
full testimony of the investigator rather than a truncated portion favorable to respondent, we think it would be artificial
indeed to deprive the court of the power to effectuate that judgment. Nor do we find constitutional significance in the fact
that the court in this instance was able to exclude the testimony in advance rather than receive it in evidence and
thereafter charge the jury to disregard it when respondent's counsel refused, as he said he would, to produce the report.
16 [422 U.S. 225, 242]
The judgment of the Court of Appeals for the Ninth Circuit is therefore
Reversed.

G.R. Nos. 115439-41 July 16, 1997

PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HONORABLE SANDIGANBAYAN, MANSUETO V. HONRADA, CEFERINO S. PAREDES, JR. and GENEROSO S.
SANSAET, respondents.

REGALADO, J.:
Through the special civil action for certiorari at bar, petitioner seeks the annulment of the resolution of respondent
Sandiganbayan, promulgated on December 22, 1993, which denied petitioner's motion for the discharge of respondent
Generoso S. Sansaet to be utilized as a state witness, and its resolution of March 7, 1994 denying the motion for
reconsideration of its preceding disposition. 1
The records show that during the dates material to this case, respondent Honrada was the Clerk of Court and Acting
Stenographer of the First Municipal Circuit Trial Court, San Francisco-Bunawan-Rosario in Agusan del Sur. Respondent
Paredes was successively the Provincial Attorney of Agusan del Sur, then Governor of the same province, and is at
present a Congressman. Respondent Sansaet was a practicing attorney who served as counsel for Paredes in several
instances pertinent to the criminal charges involved in the present recourse.
The same records also represent that sometime in 1976, respondent Paredes applied for a free patent over Lot No.
3097-A, Pls-67 of the Rosario Public Land Subdivision Survey. His application was approved and, pursuant to a free
patent granted to him, an original certificate of title was issued in his favor for that lot which is situated in
the poblacion of San Francisco, Agusan del Sur.
However, in 1985, the Director of Lands filed an action 2 for the cancellation of respondent Paredes' patent and
certificate of title since the land had been designated and reserved as a school site in the aforementioned subdivision
survey. The trial court rendered judgment 3 nullifying said patent and title after finding that respondent Paredes had
obtained the same through fraudulent misrepresentations in his application. Pertinently, respondent Sansaet served as
counsel of Paredes in that civil case. 4
Consequent to the foregoing judgment of the trial court, upon the subsequent complaint of the Sangguniang Bayan and
the preliminary investigation conducted thereon, an information for perjury 5 was filed against respondent Paredes in the
Municipal Circuit Trial Court. 6 On November 27, 1985, the Provincial Fiscal was, however, directed by the Deputy
Minister of Justice to move for the dismissal of the case on the ground inter alia of prescription, hence the proceedings
were terminated. 7 In this criminal case, respondent Paredes was likewise represented by respondent Sansaet as
counsel.
Nonetheless, respondent Sansaet was thereafter haled before the Tanodbayan for preliminary investigation on the
charge that, by using his former position as Provincial Attorney to influence and induce the Bureau of Lands officials to
favorably act on his application for free patent, he had violated Section 3(a) of Republic Act No. 3019, as amended. For
the third time, respondent Sansaet was Paredes' counsel of record therein.

On August 29, 1988, the Tanodbayan, issued a resolution 8 recommending the criminal prosecution of respondent
Paredes. Atty. Sansaet, as counsel for his aforenamed co-respondent, moved for reconsideration and, because of its
legal significance in this case, we quote some of his allegations in that motion:
. . . respondent had been charged already by the complainants before the Municipal Circuit Court
of San Francisco, Agusan del Sur, went to jail on detention in 1984 under the same set of facts and
the same evidence . . . but said case after arraignment, was ordered dismissed by the court upon
recommendation of the Department of Justice. Copy of the dismissal order, certificate of
arraignmentand the recommendation of the Department of Justice are hereto attached for ready
reference; thus the filing of this case will be a case of double jeopardy for respondent
herein . . . 9 (Emphasis supplied.)
A criminal case was subsequently filed with the Sandiganbayan 10 charging respondent Paredes with a violation of
Section 3 (a) of Republic Act No. 3019, as amended. However, a motion to quash filed by the defense was later granted
in respondent court's resolution of August 1, 1991 11 and the case was dismissed on the ground of prescription.
On January 23, 1990, one Teofilo Gelacio, a taxpayer who had initiated the perjury and graft charges against
respondent Paredes, sent a letter to the Ombudsman seeking the investigation of the three respondents herein for
falsification of public documents. 12 He claimed that respondent Honrada, in conspiracy with his herein co-respondents,
simulated and certified as true copies certain documents purporting to be a notice of arraignment, dated July 1, 1985,
and transcripts of stenographic notes supposedly taken during the arraignment of Paredes on the perjury
charge. 13 These falsified documents were annexed to respondent Paredes' motion for reconsideration of the
Tanodbayan resolution for the filing of a graft charge against him, in order to support his contention that the same would
constitute double jeopardy.
In support of his claim, Gelacio attached to his letter a certification that no notice of arraignment was ever received by
the Office of the Provincial Fiscal of Agusan del Sur in connection with that perjury case; and a certification of Presiding
Judge Ciriaco Ario that said perjury case in his court did not reach the arraignment stage since action thereon was
suspended pending the review of the case by the Department of Justice. 14
Respondents filed their respective counter-affidavits, but Sansaet subsequently discarded and repudiated the
submissions he had made in his counter-affidavit. In a so-called Affidavit of Explanations and
Rectifications, 15respondent Sansaet revealed that Paredes contrived to have the graft case under preliminary
investigation dismissed on the ground of double jeopardy by making it appear that the perjury case had been dismissed
by the trial court after he had been arraigned therein.
For that purpose, the documents which were later filed by respondent Sansaet in the preliminary investigation were
prepared and falsified by his co-respondents in this case in the house of respondent Paredes. To evade responsibility
for his own participation in the scheme, he claimed that he did so upon the instigation and inducement of respondent
Paredes. This was intended to pave the way for his discharge as a government witness in the consolidated cases, as in
fact a motion therefor was filed by the prosecution pursuant to their agreement.
Withal, in a resolution 16 dated February 24, 1992, the Ombudsman approved the filing of falsification charges against all
the herein private respondents. The proposal for the discharge of respondent Sansaet as a state witness was rejected
by the Ombudsman on this evaluative legal position:
. . . Taking his explanation, it is difficult to believe that a lawyer of his stature, in the absence of
deliberate intent to conspire, would be unwittingly induced by another to commit a crime. As

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counsel for the accused in those criminal cases, Atty. Sansaet had control over the case theory and
the evidence which the defense was going to present. Moreover, the testimony or confession of
Atty. Sansaet falls under the mantle of privileged communication between the lawyer and his client
which may be objected to, if presented in the trial.
The Ombudsman refused to reconsider that resolution 17 and, ostensibly to forestall any further controversy, he decided
to file separate informations for falsification of public documents against each of the herein respondents. Thus, three
criminal cases, 18 each of which named one of the three private respondents here as the accused therein, were filed in
the graft court. However, the same were consolidated for joint trial in the Second Division of the Sandiganbayan.
As stated at the outset, a motion was filed by the People on July 27, 1993 for the discharge of respondent Sansaet as a
state witness. It was submitted that all the requisites therefor, as provided in Section 9, Rule 119 of the Rules of Court,
were satisfied insofar as respondent Sansaet was concerned. The basic postulate was that, except for the eyewitness
testimony of respondent Sansaet, there was no other direct evidence to prove the confabulated falsification of
documents by respondents Honrada and Paredes.
Unfortunately for the prosecution, respondent Sandiganbayan, hewing to the theory of the attorney-client privilege
adverted to by the Ombudsman and invoked by the two other private respondents in their opposition to the
prosecution's motion, resolved to deny the desired discharge on this ratiocination:
From the evidence adduced, the opposition was able to establish that client and lawyer relationship
existed between Atty. Sansaet and Ceferino Paredes, Jr., before, during and after the period
alleged in the information. In view of such relationship, the facts surrounding the case, and other
confidential matter must have been disclosed by accused Paredes, as client, to accused Sansaet,
as his lawyer in his professional capacity. Therefore, the testimony of Atty. Sansaet on the facts
surrounding the offense charged in the information is privileged. 19
Reconsideration of said resolution having been likewise denied, 20 the controversy was elevated to this Court by the
prosecution in an original action for the issuance of the extraordinary writ of certiorari against respondent
Sandiganbayan.
The principal issues on which the resolution of the petition at bar actually turns are therefore (1) whether or not the
projected testimony of respondent Sansaet, as proposed state witness, is barred by the attorney-client privilege; and (2)
whether or not, as a consequence thereof, he is eligible for discharge to testify as a particeps criminis.
As already stated, respondent Sandiganbayan ruled that due to the lawyer-client relationship which existed between
herein respondents Paredes and Sansaet during the relevant periods, the facts surrounding the case and other
confidential matters must have been disclosed by respondent Paredes, as client, to respondent Sansaet, as his lawyer.
Accordingly, it found "no reason to discuss it further since Atty. Sansaet cannot be presented as a witness against
accused Ceferino S. Paredes, Jr. without the latter's consent." 21
The Court is of a contrary persuasion. The attorney-client privilege cannot apply in these cases, as the facts thereof and
actuations of both respondents therein constitute an exception to the rule. For a clearer understanding of that evidential
rule, we will first sweep aside some distracting mental cobwebs in these cases.
1. It may correctly be assumed that there was a confidential communication made by Paredes to Sansaet in connection
with Criminal Cases Nos. 17791-93 for falsification before respondent court, and this may reasonably be expected since
Paredes was the accused and Sansaet his counsel therein. Indeed, the fact that Sansaet was called to witness the
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preparation of the falsified documents by Paredes and Honrada was as eloquent a communication, if not more, than
verbal statements being made to him by Paredes as to the fact and purpose of such falsification. It is significant that the
evidentiary rule on this point has always referred to "any communication," without distinction or qualification. 22
In the American jurisdiction from which our present evidential rule was taken, there is no particular mode by which a
confidential communication shall be made by a client to his attorney. The privilege is not confined to verbal or written
communications made by the client to his attorney but extends as well to information communicated by the client to the
attorney by other means. 23
Nor can it be pretended that during the entire process, considering their past and existing relations as counsel and client
and, further, in view of the purpose for which such falsified documents were prepared, no word at all passed between
Paredes and Sansaet on the subject matter of that criminal act. The clincher for this conclusion is the undisputed fact
that said documents were thereafter filed by Sansaet in behalf of Paredes as annexes to the motion for reconsideration
in the preliminary investigation of the graft case before the Tanodbayan. 24 Also, the acts and words of the parties during
the period when the documents were being falsified were necessarily confidential since Paredes would not have invited
Sansaet to his house and allowed him to witness the same except under conditions of secrecy and confidence.
2. It is postulated that despite such complicity of Sansaet at the instance of Paredes in the criminal act for which the
latter stands charged, a distinction must be made between confidential communications relating to past crimes already
committed, and future crimes intended to be committed, by the client. Corollarily, it is admitted that the announced
intention of a client to commit a crime is not included within the confidences which his attorney is bound to respect.
Respondent court appears, however, to believe that in the instant case it is dealing with a past crime, and that
respondent Sansaet is set to testify on alleged criminal acts of respondents Paredes and Honrada that have already
been committed and consummated.
The Court reprobates the last assumption which is flawed by a somewhat inaccurate basis. It is true that by now, insofar
as the falsifications to be testified to in respondent court are concerned, those crimes were necessarily committed in the
past. But for the application of the attorney-client privilege, however, the period to be considered is the date when the
privileged communication was made by the client to the attorney in relation to either a crime committed in the past or
with respect to a crime intended to be committed in the future. In other words, if the client seeks his lawyer's advice with
respect to a crime that the former has theretofore committed, he is given the protection of a virtual confessional seal
which the attorney-client privilege declares cannot be broken by the attorney without the client's consent. The same
privileged confidentiality, however, does not attach with regard to a crime which a client intends to commit thereafter or
in the future and for purposes of which he seeks the lawyer's advice.
Statements and communications regarding the commission of a crime already committed, made by a party who
committed it, to an attorney, consulted as such, are privileged communications. Contrarily, the unbroken stream of
judicial dicta is to the effect that communications between attorney and client having to do with the client'scontemplated
criminal acts, or in aid or furtherance thereof, are not covered by the cloak of privileges ordinarily existing in reference to
communications between attorney and client. 25 (Emphases supplied.)
3. In the present cases, the testimony sought to be elicited from Sansate as state witness are the communications made
to him by physical acts and/or accompanying words of Parades at the time he and Honrada, either with the active or
passive participation of Sansaet, were about to falsify, or in the process of falsifying, the documents which were later
filed in the Tanodbayan by Sansaet and culminated in the criminal charges now pending in respondent Sandiganbayan.
Clearly, therefore, the confidential communications thus made by Paredes to Sansaet were for purposes of and in
reference to the crime of falsification which had not yet been committed in the past by Paredes but which he, in
confederacy with his present co-respondents, later committed. Having been made for purposes of a future offense,
those communications are outside the pale of the attorney-client privilege.

4. Furthermore, Sansaet was himself a conspirator in the commission of that crime of falsification which he, Paredes
and Honrada concocted and foisted upon the authorities. It is well settled that in order that a communication between a
lawyer and his client may be privileged, it must be for a lawful purpose or in furtherance of a lawful end. The existence
of an unlawful purpose prevents the privilege from attaching. 26 In fact, it has also been pointed out to the Court that the
"prosecution of the honorable relation of attorney and client will not be permitted under the guise of privilege, and every
communication made to an attorney by a client for a criminal purpose is a conspiracy or attempt at a conspiracy which is
not only lawful to divulge, but which the attorney under certain circumstances may be bound to disclose at once in the
interest of justice." 27
It is evident, therefore, that it was error for respondent Sandiganbayan to insist that such unlawful communications
intended for an illegal purpose contrived by conspirators are nonetheless covered by the so-called mantle of privilege.
To prevent a conniving counsel from revealing the genesis of a crime which was later committed pursuant to a
conspiracy, because of the objection thereto of his conspiring client, would be one of the worst travesties in the rules of
evidence and practice in the noble profession of law.
II

considering that they are charged for the same offense. In criminal law, persons indicted for the
same offense and tried together are called joint defendants.
As likewise submitted therefor by Mr. Justice Francisco along the same vein, there having been a consolidation of the
three cases, the several actions lost their separate identities and became a single action in which a single judgment is
rendered, the same as if the different causes of action involved had originally been joined in a single action. 29
Indeed, the former provision of the Rules referring to the situation "(w)hen two or more persons are charged with the
commission of a certain offense" was too broad and indefinite; hence the word "joint" was added to indicate the identity
of the charge and the fact that the accused are all together charged therewith substantially in the same manner in point
of commission and time. The word "joint" means "common to two or more," as "involving the united activity of two or
more," or "done or produced by two or more working together," or "shared by or affecting two or more. 30 Had it been
intended that all the accused should always be indicted in one and the same information, the Rules could have said so
with facility, but it did not so require in consideration of the circumstances obtaining in the present case and the
problems that may arise from amending the information. After all, the purpose of the Rule can be achieved by
consolidation of the cases as an alternative mode.

On the foregoing premises, we now proceed to the consequential inquiry as to whether respondent Sansaet qualifies,
as a particeps criminis, for discharge from the criminal prosecution in order to testify for the State. Parenthetically,
respondent court, having arrived at a contrary conclusion on the preceding issue, did not pass upon this second aspect
and the relief sought by the prosecution which are now submitted for our resolution in the petition at bar. We shall,
however, first dispose likewise of some ancillary questions requiring preludial clarification.

2. We have earlier held that Sansaet was a conspirator in the crime of falsification, and the rule is that since in a
conspiracy the act of one is the act of all, the same penalty shall be imposed on all members of the conspiracy. Now,
one of the requirements for a state witness is that he "does not appear to be the most guilty." 31 not that he must be the
least guilty 32 as is so often erroneously framed or submitted. The query would then be whether an accused who was
held guilty by reason of membership in a conspiracy is eligible to be a state witness.

1. The fact that respondent Sandiganbayan did not fully pass upon the query as to whether or not respondent Sansaet
was qualified to be a state witness need not prevent this Court from resolving that issue as prayed for by petitioner.
Where the determinative facts and evidence have been submitted to this Court such that it is in a position to finally
resolve the dispute, it will be in the pursuance of the ends of justice and the expeditious administration thereof to resolve
the case on the merits, instead of remanding it to the trial court. 28

To be sure, in People vs. Ramirez, et al. 33 we find this obiter:

2. A reservation is raised over the fact that the three private respondents here stand charged in three separate
informations. It will be recalled that in its resolution of February 24, 1992, the Ombudsman recommended the filing of
criminal charges for falsification of public documents against all the respondents herein. That resolution was affirmed
but, reportedly in order to obviate further controversy, one information was filed against each of the three respondents
here, resulting in three informations for the same acts of falsification.
This technicality was, however, sufficiently explained away during the deliberations in this case by the following
discussion thereof by Mr. Justice Davide, to wit:
Assuming no substantive impediment exists to block Sansaet's discharge as state witness, he can,
nevertheless, be discharged even if indicted under a separate information. I suppose the three
cases were consolidated for joint trial since they were all raffled to the Second Division of the
Sandiganbayan. Section 2, Rule XV of the Revised Rules of the Sandiganbayan allows
consolidation in only one Division of cases arising from the same incident or series of incidents, or
involving common questions of law and fact. Accordingly, for all legal intents and purposes,
Sansaet stood as co-accused and he could be discharged as state witness. It is of no moment that
he was charged separately from his co-accused. While Section 9 of Rule 119 of the 1985 Rules of
Criminal Procedure uses the word jointly, which was absent in the old provision, the consolidated
and joint trial has the effect of making the three accused co-accused or joint defendants, especially
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It appears that Apolonio Bagispas was the real mastermind. It is believable that he persuaded the
others to rob Paterno, not to kill him for a promised fee. Although he did not actually commit any of
the stabbings, it was a mistake to discharge Bagispas as a state witness. All the perpetrators of the
offense, including him, were bound in a conspiracy that made them equally guilty.
However, prior thereto, in People vs. Roxas, et al., 34 two conspirators charged with five others in three separate
informations for multiple murder were discharged and used as state witnesses against their confederates. Subsequent
thereto, in Lugtu, et al. vs. Court of Appeals, et al., 35 one of the co-conspirators was discharged from the information
charging him and two others with the crime of estafa. The trial court found that he was not the most guilty as, being a
poor and ignorant man, he was easily convinced by his two co-accused to open the account with the bank and which
led to the commission of the crime.
On appeal, this Court held that the finding of respondent appellate court that Lugtu was just as guilty as his co-accused,
and should not be discharged as he did not appear to be not the most guilty, is untenable. In other words, the Court took
into account the gravity or nature of the acts committed by the accused to be discharged compared to those of his coaccused, and not merely the fact that in law the same or equal penalty is imposable on all of them.
Eventually, what was just somehow assumed but not explicity articulated found expression in People vs. Ocimar, et
al., 36 which we quote in extenso:
Ocimar contends that in the case at bar Bermudez does not satisfy the conditions for the discharge of a co-accused to
become a state witness. He argues that no accused in a conspiracy can lawfully be discharged and utilized as a state

witness, for not one of them could satisfy the requisite of appearing not to be the most guilty. Appellant asserts that
since accused Bermudez was part of the conspiracy, he is equally guilty as the others.
We do not agree. First, there is absolute necessity for the testimony of Bermudez. For, despite the presentation of four
(4) other witnesses, none of them could positively identify the accused except Bermudez who was one of those who
pulled the highway heist which resulted not only in the loss of cash, jewelry and other valuables, but even the life of
Capt. Caeba, Jr. It was in fact the testimony of Bermudez that clinched the case for the prosecution. Second, without
his testimony, no other direct evidence was available for the prosecution to prove the elements of the crime. Third, his
testimony could be, as indeed it was, substantially corroborated in its material points as indicated by the trial court in its
well-reasoned decision. Fourth, he does not appear to be the most guilty. As the evidence reveals, he was only invited
to a drinking party without having any prior knowledge of the plot to stage a highway robbery. But even assuming that
he later became part of the conspiracy, he does not appear to be the most guilty. What the law prohibits is that the most
guilty will be set free while his co-accused who are less guilty will be sent to jail. And by "most guilty" we mean the
highest degree of culpability in terms of participation in the commission of the offense and not necessarily the severity
of the penalty imposed. While all the accused may be given the same penalty by reason of conspiracy, yet one may be
considered least guilty if We take into account his degree of participation in the perpetration of the offense. Fifth, there is
no evidence that he has at any time been convicted of any offense involving moral turpitude.
xxx xxx xxx
Thus, We agree with the observations of the Solicitor General that the rule on the discharge of an
accused to be utilized as state witness clearly looks at his actual and individual participation in the
commission of the crime, which may or may not have been perpetrated in conspiracy with the other
accused. Since Bermudez was not individually responsible for the killing committed on the
occasion of the robbery except by reason of conspiracy, it cannot be said then that Bermudez
appears to be the most guilty. Hence, his discharge to be a witness for the government is clearly
warranted. (Emphasis ours.)
The rule of equality in the penalty to be imposed upon conspirators found guilty of a criminal offense is based
on the concurrence of criminal intent in their minds and translated into concerted physical action although of
varying acts or degrees of depravity. Since the Revised Penal Code is based on the classical school of
thought, it is the identity of the mens rea which is considered the predominant consideration and, therefore,
warrants the imposition of the same penalty on the consequential theory that the act of one is thereby the act
of all.
Also, this is an affair of substantive law which should not be equated with the procedural rule on the
discharge of particeps criminis. This adjective device is based on other considerations, such as the need for
giving immunity to one of them in order that not all shall escape, and the judicial experience that the candid
admission of an accused regarding his participation is a guaranty that he will testify truthfully. For those
reasons, the Rules provide for certain qualifying criteria which, again, are based on judicial experience
distilled into a judgmental policy.
III
The Court is reasonably convinced, and so holds, that the other requisites for the discharge of respondent Sansaet as a
state witness are present and should have been favorably appreciated by the Sandiganbayan.

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Respondent Sansaet is the only cooperative eyewitness to the actual commission of the falsification charged in the
criminal cases pending before respondent court, and the prosecution is faced with the formidable task of establishing
the guilt of the two other co-respondents who steadfastly deny the charge and stoutly protest their innocence. There is
thus no other direct evidence available for the prosecution of the case, hence there is absolute necessity for the
testimony of Sansaet whose discharge is sought precisely for that purpose. Said respondent has indicated his
conformity thereto and has, for the purposes required by the Rules, detailed the substance of his projected testimony in
his Affidavit of Explanation and Rectifications.
His testimony can be substantially corroborated on its material points by reputable witnesses, identified in the basic
petition with a digest of their prospective testimonies, as follows: Judge Ciriaco C. Ario, Municipal Circuit Trial Court in
San Francisco, Agusan del Sur; Provincial Prosecutor and Deputized Ombudsman Prosecutor Claudio A. Nistal; Teofilo
Gelacio, private complainant who initiated the criminal cases through his letter-complaint; Alberto Juvilan of the
Sangguniang Bayan of San Fernando, Agusan del Sur, who participated in the resolution asking their Provincial
Governor to file the appropriate case against respondent Paredes, and Francisco Macalit, who obtained the certification
of non-arraignment from Judge Ario.
On the final requirement of the Rules, it does not appear that respondent Sansaet has at any time been convicted of
any offense involving moral turpitude. Thus, with the confluence of all the requirements for the discharge of this
respondent, both the Special Prosecutor and the Solicitor General strongly urge and propose that he be allowed to
testify as a state witness.
This Court is not unaware of the doctrinal rule that, on this procedural aspect, the prosecution may propose but it is for
the trial court, in the exercise of its sound discretion, to determine the merits of the proposal and make the
corresponding disposition. It must be emphasized, however, that such discretion should have been exercised, and the
disposition taken on a holistic view of all the facts and issues herein discussed, and not merely on the sole issue of the
applicability of the attorney-client privilege.
This change of heart and direction respondent Sandiganbayan eventually assumed, after the retirement of two
members of its Second Division 37 and
the reconstitution thereof. In an inversely anticlimactic Manifestation and Comment 38 dated June 14, 1995, as required
by this Court in its resolution on December 5, 1994, the chairman and new members thereof 39 declared:
4) That the questioned Resolutions of December 22, 1993 and March 7, 1994 upon which the
Petition for Certiorari filed by the prosecution are based, was penned by Associate Justice Narciso
T. Atienza and concurred in by the undersigned and Associate Justice Augusto M. Amores;
5) That while the legal issues involved had been already discussed and passed upon by the
Second Division in the aforesaid Resolution, however, after going over the arguments submitted by
the Solicitor-General and re-assessing Our position on the matter, We respectfully beg leave of the
Honorable Supreme Court to manifest that We are amenable to setting aside the questioned
Resolutions and to grant the prosecution's motion to discharge accused Generoso Sansaet as
state witness, upon authority of the Honorable Supreme Court for the issuance of the proper
Resolution to that effect within fifteen (15) days from notice thereof.
WHEREFORE, the writ of certiorari prayed for is hereby granted SETTING ASIDE the impunged resolutions and
ORDERING that the present reliefs sought in these cases by petitioner be allowed and given due course by respondent
Sandiganbayan.SO ORDERED.