G.R. No. 138231 - Castillo vs. Sandiganbayan

On July 23, 1987, the Republic of the Philippines filed a complaint with the Sandiganbayan in Civil Case No. 0014 for reconveyance, reversion, accounting, restitution, and damages.
The Expanded Complaint specifically alleged that petitioner Gregorio R. Castillo acted as a dummy, nominee, and/or agent for a constellation of defendants—including Ferdinand E. Marcos, Imelda R. Marcos, and others—in establishing Hotel Properties Inc. to conceal ownership and secure beneficial interest and control over the Silahis International Hotel.
The allegations further detailed that Castillo executed documents as attorney-in-fact for the defendants Enriquezes and Panlilios, thereby facilitating the allegedly fraudulent acquisition of the hotel’s controlling interest.

On February 29, 1988, petitioner filed his Answer, which included a counterclaim against the Republic.
In his Answer, petitioner raised an affirmative defense by alleging that his role as attorney-in-fact did not make him a real-party defendant, asserting that he merely performed professional duties without knowledge or participation in the wrongful acts committed by his clients.

Petitioner died on October 24, 1992.
Following his death, a motion to dismiss the complaint was filed on the grounds that the case for recovery of money, debt, or interest did not survive his death.
On February 19, 1993, the Sandiganbayan resolved that the complaint survived the death since it involved recovery of both real and personal property, as well as damages for tortious misconduct.

On October 15, 1996, petitioner, represented by his heirs, filed a Motion to Dismiss arguing that the complaint was violative of the lawyer-client confidentiality privilege, invoking the precedent set in Regala vs. Sandiganbayan.
The Republic opposed the motion, contending that the privilege should not be used at this stage of the proceedings and emphasizing that petitioner was being sued as a principal defendant for conspiracy, rather than merely in his capacity as counsel.

On November 26, 1998, the Sandiganbayan promulgated a Resolution (dated November 24, 1998) denying the motion to dismiss, holding that petitioner was implicated as principal defendant in a conspiracy with the other defendants.
The resolution noted that the lawyer-client confidentiality privilege, though raised, is a defense issue best addressed when testimonial compulsion arises, and not as a ground for dismissal at the pleading stage.
A motion for reconsideration was subsequently filed by petitioner, which was also denied, prompting the present petition for certiorari.

Petitioner argued that the Sandiganbayan disregarded the Supreme Court ruling in Regala vs. Sandiganbayan by not dismissing the complaint on the grounds of lawyer-client confidentiality privilege.
In contrast, the respondent Republic maintained that the circumstances in the present case were different from those in Regala, noting that petitioner was sued as principal defendant, and that mere invocation of the privilege does not exempt him from facing the conspiracy charge.

Whether the ruling in Regala vs. Sandiganbayan, which highlighted the lawyer-client confidentiality privilege, should be applied to dismiss the complaint against petitioner.
Whether petitioner’s actions as attorney-in-fact without actual knowledge of or participation in alleged wrongdoing should preclude his inclusion as a principal defendant.
Whether the invocation of the lawyer-client confidentiality privilege is a valid ground for dismissal at the preliminary stages of the case.
Whether the death of petitioner should have resulted in abatement of the complaint.
Whether the Sandiganbayan properly applied the doctrine of stare decisis and judicial precedent in its rulings concerning the motion to dismiss.