G.R. No.

105938 September 20, 1996

TEODORO R. REGALA, EDGARDO J. ANGARA, AVELINO V. CRUZ, JOSE C. CONCEPCION, ROGELIO A. VINLUAN, VICTOR P.
LAZATIN and EDUARDO U. ESCUETA, petitioners,
vs.
THE HONORABLE SANDIGANBAYAN, First Division, REPUBLIC OF THE PHILIPPINES, ACTING THROUGH THE PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT, and RAUL S. ROCO, respondents.

G.R. No. 108113 September 20, 1996

PARAJA G. HAYUDINI, petitioner,
vs.
THE SANDIGANBAYAN and THE REPUBLIC OF THE PHILIPPINES, respondents.

KAPUNAN, J.:

These case touch the very cornerstone of every State's judicial system, upon which the workings of the contentious and adversarial system in the
Philippine legal process are based — the sanctity of fiduciary duty in the client-lawyer relationship. The fiduciary duty of a counsel and advocate
is also what makes the law profession a unique position of trust and confidence, which distinguishes it from any other calling. In this instance,
we have no recourse but to uphold and strengthen the mantle of protection accorded to the confidentiality that proceeds from the performance of
the lawyer's duty to his client.

The facts of the case are undisputed.

The matters raised herein are an offshoot of the institution of the Complaint on July 31, 1987 before the Sandiganbayan by the Republic of the
Philippines, through the Presidential Commission on Good Government against Eduardo M. Cojuangco, Jr., as one of the principal defendants,
for the recovery of alleged ill-gotten wealth, which includes shares of stocks in the named corporations in PCGG Case No. 33 (Civil Case No.
0033), entitled "Republic of the Philippines versus Eduardo Cojuangco, et al."1

Among the dependants named in the case are herein petitioners Teodoro Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion,
Rogelio A. Vinluan, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayudini, and herein private respondent Raul S. Roco, who all were
then partners of the law firm Angara, Abello, Concepcion, Regala and Cruz Law Offices (hereinafter referred to as the ACCRA Law Firm).
ACCRA Law Firm performed legal services for its clients, which included, among others, the organization and acquisition of business
associations and/or organizations, with the correlative and incidental services where its members acted as incorporators, or simply, as
stockholders. More specifically, in the performance of these services, the members of the law firm delivered to its client documents which
substantiate the client's equity holdings, i.e., stock certificates endorsed in blank representing the shares registered in the client's name, and a
blank deed of trust or assignment covering said shares. In the course of their dealings with their clients, the members of the law firm acquire
information relative to the assets of clients as well as their personal and business circumstances. As members of the ACCRA Law Firm,
petitioners and private respondent Raul Roco admit that they assisted in the organization and acquisition of the companies included in Civil Case
No. 0033, and in keeping with the office practice, ACCRA lawyers acted as nominees-stockholders of the said corporations involved in
sequestration proceedings.2

On August 20, 1991, respondent Presidential Commission on Good Government (hereinafter referred to as respondent PCGG) filed a "Motion to
Admit Third Amended Complaint" and "Third Amended Complaint" which excluded private respondent Raul S. Roco from the complaint in
PCGG Case No. 33 as party-defendant.3 Respondent PCGG based its exclusion of private respondent Roco as party-defendant on his
undertaking that he will reveal the identity of the principal/s for whom he acted as nominee/stockholder in the companies involved in PCGG
Case No. 33.4

Petitioners were included in the Third Amended Complaint on the strength of the following allegations:

14. Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro Regala, Avelino V. Cruz, Rogelio A. Vinluan, Eduardo
U. Escueta, Paraja G. Hayudini and Raul Roco of the Angara Concepcion Cruz Regala and Abello law offices (ACCRA) plotted, devised,
schemed conspired and confederated with each other in setting up, through the use of the coconut levy funds, the financial and corporate
framework and structures that led to the establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CIC, and more than twenty other
coconut levy funded corporations, including the acquisition of San Miguel Corporation shares and its institutionalization through presidential
directives of the coconut monopoly. Through insidious means and machinations, ACCRA, being the wholly-owned investment arm, ACCRA
Investments Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total outstanding capital
stock of UCPB as of 31 March 1987. This ranks ACCRA Investments Corporation number 44 among the top 100 biggest stockholders of UCPB
which has approximately 1,400,000 shareholders. On the other hand, corporate books show the name Edgardo J. Angara as holding
approximately 3,744 shares as of February, 1984.5

In their answer to the Expanded Amended Complaint, petitioners ACCRA lawyers alleged that:

4.4 Defendants-ACCRA lawyers' participation in the acts with which their codefendants are charged, was in furtherance of legitimate lawyering.

4.4.1 In the course of rendering professional and legal services to clients, defendants-ACCRA lawyers, Jose C. Concepcion, Teodoro D. Regala,
Rogelio A. Vinluan and Eduardo U. Escueta, became holders of shares of stock in the corporations listed under their respective names in Annex
"A" of the expanded Amended Complaint as incorporating or acquiring stockholders only and, as such, they do not claim any proprietary interest
in the said shares of stock.
4.5 Defendant ACCRA-lawyer Avelino V. Cruz was one of the incorporators in 1976 of Mermaid Marketing Corporation, which was organized
for legitimate business purposes not related to the allegations of the expanded Amended Complaint. However, he has long ago transferred any
material interest therein and therefore denies that the "shares" appearing in his name in Annex "A" of the expanded Amended Complaint are his
assets.6

Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed a separate answer denying the allegations in the complaint
implicating him in the alleged ill-gotten wealth.7

Petitioners ACCRA lawyers subsequently filed their "COMMENT AND/OR OPPOSITION" dated October 8, 1991 with Counter-Motion that
respondent PCGG similarly grant the same treatment to them (exclusion as parties-defendants) as accorded private respondent Roco.8 The
Counter-Motion for dropping petitioners from the complaint was duly set for hearing on October 18, 1991 in accordance with the requirements
of Rule 15 of the Rules of Court.

In its "Comment," respondent PCGG set the following conditions precedent for the exclusion of petitioners, namely: (a) the disclosure of the
identity of its clients; (b) submission of documents substantiating the lawyer-client relationship; and (c) the submission of the deeds of
assignments petitioners executed in favor of its client covering their respective
shareholdings.9

Consequently, respondent PCGG presented supposed proof to substantiate compliance by private respondent Roco of the conditions precedent to
warrant the latter's exclusion as party-defendant in PCGG Case No. 33, to wit: (a) Letter to respondent PCGG of the counsel of respondent Roco
dated May 24, 1989 reiterating a previous request for reinvestigation by the PCGG in PCGG Case No. 33; (b) Affidavit dated March 8, 1989
executed by private respondent Roco as Attachment to the letter aforestated in (a); and (c) Letter of the Roco, Bunag, and Kapunan Law Offices
dated September 21, 1988 to the respondent PCGG in behalf of private respondent Roco originally requesting the reinvestigation and/or re-
examination of the evidence of the PCGG against Roco in its Complaint in PCGG Case No. 33. 10

It is noteworthy that during said proceedings, private respondent Roco did not refute petitioners' contention that he did actually not reveal the
identity of the client involved in PCGG Case No. 33, nor had he undertaken to reveal the identity of the client for whom he acted as nominee-
stockholder. 11

On March 18, 1992, respondent Sandiganbayan promulgated the Resolution, herein questioned, denying the exclusion of petitioners in PCGG
Case No. 33, for their refusal to comply with the conditions required by respondent PCGG. It held:

xxx xxx xxx

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom they have acted, i.e. their principal, and that will
be their choice. But until they do identify their clients, considerations of whether or not the privilege claimed by the ACCRA lawyers exists
cannot even begin to be debated. The ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to
establish the basis for recognizing the privilege; the existence and identity of the client.

This is what appears to be the cause for which they have been impleaded by the PCGG as defendants herein.

5. The PCGG is satisfied that defendant Roco has demonstrated his agency and that Roco has apparently identified his principal, which
revelation could show the lack of cause against him. This in turn has allowed the PCGG to exercise its power both under the rules of Agency and
under Section 5 of E.O. No. 14-A in relation to the Supreme Court's ruling in Republic v. Sandiganbayan (173 SCRA 72).

The PCGG has apparently offered to the ACCRA lawyers the same conditions availed of by Roco; full disclosure in exchange for exclusion from
these proceedings (par. 7, PCGG's COMMENT dated November 4, 1991). The ACCRA lawyers have preferred not to make the disclosures
required by the PCGG.

The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as party defendants. In the same vein, they cannot compel the
PCGG to be accorded the same treatment accorded to Roco.

Neither can this Court.

WHEREFORE, the Counter Motion dated October 8, 1991 filed by the ACCRA lawyers and joined in by Atty. Paraja G. Hayudini for the same
treatment by the PCGG as accorded to Raul S. Roco is DENIED for lack of merit. 12

ACCRA lawyers moved for a reconsideration of the above resolution but the same was denied by the respondent Sandiganbayan. Hence, the
ACCRA lawyers filed the petition for certiorari, docketed as G.R. No. 105938, invoking the following grounds:

The Honorable Sandiganbayan gravely abused its discretion in subjecting petitioners ACCRA lawyers who undisputably acted as lawyers in
serving as nominee-stockholders, to the strict application of the law of agency.

II

The Honorable Sandiganbayan committed grave abuse of discretion in not considering petitioners ACCRA lawyers and Mr. Roco as similarly
situated and, therefore, deserving of equal treatment.
1. There is absolutely no evidence that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s) for whom he acted as
nominee-stockholder.

2. Even assuming that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s), the disclosure does not constitute a
substantial distinction as would make the classification reasonable under the equal protection clause.

3. Respondent Sandiganbayan sanctioned favoritism and undue preference in favor of Mr. Roco in violation of the equal protection clause.

III

The Honorable Sandiganbayan committed grave abuse of discretion in not holding that, under the facts of this case, the attorney-client privilege
prohibits petitioners ACCRA lawyers from revealing the identity of their client(s) and the other information requested by the PCGG.

1. Under the peculiar facts of this case, the attorney-client privilege includes the identity of the client(s).

2. The factual disclosures required by the PCGG are not limited to the identity of petitioners ACCRA lawyers' alleged client(s) but extend to
other privileged matters.

IV

The Honorable Sandiganbayan committed grave abuse of discretion in not requiring that the dropping of party-defendants by the PCGG must be
based on reasonable and just grounds and with due consideration to the constitutional right of petitioners ACCRA lawyers to the equal protection
of the law.

Petitioner Paraja G. Hayudini, likewise, filed his own motion for reconsideration of the March 18, 1991 resolution which was denied by
respondent Sandiganbayan. Thus, he filed a separate petition for certiorari, docketed as G.R. No. 108113, assailing respondent Sandiganbayan's
resolution on essentially the same grounds averred by petitioners in G.R. No. 105938.

Petitioners contend that the exclusion of respondent Roco as party-defendant in PCGG Case No. 33 grants him a favorable treatment, on the
pretext of his alleged undertaking to divulge the identity of his client, giving him an advantage over them who are in the same footing as partners
in the ACCRA law firm. Petitioners further argue that even granting that such an undertaking has been assumed by private respondent Roco, they
are prohibited from revealing the identity of their principal under their sworn mandate and fiduciary duty as lawyers to uphold at all times the
confidentiality of information obtained during such lawyer-client relationship.

Respondent PCGG, through its counsel, refutes petitioners' contention, alleging that the revelation of the identity of the client is not within the
ambit of the lawyer-client confidentiality privilege, nor are the documents it required (deeds of assignment) protected, because they are evidence
of nominee status. 13

In his comment, respondent Roco asseverates that respondent PCGG acted correctly in excluding him as party-defendant because he "(Roco) has
not filed an Answer. PCGG had therefore the right to dismiss Civil Case No. 0033 as to Roco 'without an order of court by filing a notice of
dismissal'," 14 and he has undertaken to identify his principal. 15

Petitioners' contentions are impressed with merit.

It is quite apparent that petitioners were impleaded by the PCGG as co-defendants to force them to disclose the identity of their clients. Clearly,
respondent PCGG is not after petitioners but the "bigger fish" as they say in street parlance. This ploy is quite clear from the PCGG's willingness
to cut a deal with petitioners — the names of their clients in exchange for exclusion from the complaint. The statement of the Sandiganbayan in
its questioned resolution dated March 18, 1992 is explicit:

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom they have acted, i.e, their principal, and that will
be their choice. But until they do identify their clients, considerations of whether or not the privilege claimed by the ACCRA lawyers exists
cannot even begin to be debated. The ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to
establish the basis for recognizing the privilege; the existence and identity of the client.

This is what appears to be the cause for which they have been impleaded by the PCGG as defendants herein. (Emphasis ours)

In a closely related case, Civil Case No. 0110 of the Sandiganbayan, Third Division, entitled "Primavera Farms, Inc., et al. vs. Presidential
Commission on Good Government" respondent PCGG, through counsel Mario Ongkiko, manifested at the hearing on December 5, 1991 that the
PCGG wanted to establish through the ACCRA that their "so called client is Mr. Eduardo Cojuangco;" that "it was Mr. Eduardo Cojuangco who
furnished all the monies to those subscription payments in corporations included in Annex "A" of the Third Amended Complaint; that the
ACCRA lawyers executed deeds of trust and deeds of assignment, some in the name of particular persons; some in blank.

We quote Atty. Ongkiko:

ATTY. ONGKIKO:
With the permission of this Hon. Court. I propose to establish through these ACCRA lawyers that, one, their so-called client is Mr. Eduardo
Cojuangco. Second, it was Mr. Eduardo Cojuangco who furnished all the monies to these subscription payments of these corporations who are
now the petitioners in this case. Third, that these lawyers executed deeds of trust, some in the name of a particular person, some in blank. Now,
these blank deeds are important to our claim that some of the shares are actually being held by the nominees for the late President Marcos.
Fourth, they also executed deeds of assignment and some of these assignments have also blank assignees. Again, this is important to our claim
that some of the shares are for Mr. Conjuangco and some are for Mr. Marcos. Fifth, that most of thes e corporations are really just paper
corporations. Why do we say that? One: There are no really fixed sets of officers, no fixed sets of directors at the time of incorporation and even
up to 1986, which is the crucial year. And not only that, they have no permits from the municipal authorities in Makati. Next, actually all their
addresses now are care of Villareal Law Office. They really have no address on records. These are some of the principal things that we would ask
of these nominees stockholders, as they called themselves. 16

It would seem that petitioners are merely standing in for their clients as defendants in the complaint. Petitioners are being prosecuted solely on
the basis of activities and services performed in the course of their duties as lawyers. Quite obviously, petitioners' inclusion as co-defendants in
the complaint is merely being used as leverage to compel them to name their clients and consequently to enable the PCGG to nail these clients.
Such being the case, respondent PCGG has no valid cause of action as against petitioners and should exclude them from the Third Amended
Complaint.

II

The nature of lawyer-client relationship is premised on the Roman Law concepts of locatio conductio operarum (contract of lease of services)
where one person lets his services and another hires them without reference to the object of which the services are to be performed, wherein
lawyers' services may be compensated by honorarium or for hire, 17 and mandato (contract of agency) wherein a friend on whom reliance could
be placed makes a contract in his name, but gives up all that he gained by the contract to the person who requested him. 18 But the lawyer-client
relationship is more than that of the principal-agent and lessor-lessee.

In modern day perception of the lawyer-client relationship, an attorney is more than a mere agent or servant, because he possesses special
powers of trust and confidence reposed on him by his client. 19 A lawyer is also as independent as the judge of the court, thus his powers are
entirely different from and superior to those of an ordinary agent.20 Moreover, an attorney also occupies what may be considered as a "quasi-
judicial office" since he is in fact an officer of the Court 21 and exercises his judgment in the choice of courses of action to be taken favorable to
his client.

Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct and duties that breathe life into it, among those, the fiduciary
duty to his client which is of a very delicate, exacting and confidential character, requiring a very high degree of fidelity and good faith, 22 that
is required by reason of necessity and public interest 23 based on the hypothesis that abstinence from seeking legal advice in a good cause is an
evil which is fatal to the administration of justice. 24

It is also the strict sense of fidelity of a lawyer to his client that distinguishes him from any other professional in society. This conception is
entrenched and embodies centuries of established and stable tradition. 25 In Stockton v. Ford,26 the U. S. Supreme Court held:

There are few of the business relations of life involving a higher trust and confidence than that of attorney and client, or generally speaking, one
more honorably and faithfully discharged; few more anxiously guarded by the law, or governed by the sterner principles of morality and justice;
and it is the duty of the court to administer them in a corresponding spirit, and to be watchful and industrious, to see that confidence thus reposed
shall not be used to the detriment or prejudice of the rights of the party bestowing it. 27

In our jurisdiction, this privilege takes off from the old Code of Civil Procedure enacted by the Philippine Commission on August 7, 1901.
Section 383 of the Code specifically "forbids counsel, without authority of his client to reveal any communication made by the client to him or
his advice given thereon in the course of professional employment." 28 Passed on into various provisions of the Rules of Court, the attorney-
client privilege, as currently worded provides:

Sec. 24. Disqualification by reason of privileged communication. — The following persons cannot testify as to matters learned in confidence in
the following cases:

xxx xxx xxx

An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given
thereon in the course of, or with a view to, professional employment, can an attorney's secretary, stenographer, or clerk be examined, without the
consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity. 29

Further, Rule 138 of the Rules of Court states:

Sec. 20. It is the duty of an attorney: (e) to maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client,
and to accept no compensation in connection with his client's business except from him or with his knowledge and approval.

This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility which provides that:

Canon 17. A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.

Canon 15 of the Canons of Professional Ethics also demands a lawyer's fidelity to client:
The lawyers owes "entire devotion to the interest of the client, warm zeal in the maintenance and defense of his rights and the exertion of his
utmost learning and ability," to the end that nothing be taken or be withheld from him, save by the rules of law, legally applied. No fear of
judicial disfavor or public popularity should restrain him from the full discharge of his duty. In the judicial forum the client is entitled to the
benefit of any and every remedy and defense that is authorized by the law of the land, and he may expect his lawyer to assert every such remedy
or defense. But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within and not without the bounds of the
law. The office of attorney does not permit, much less does it demand of him for any client, violation of law or any manner of fraud or chicanery.
He must obey his own conscience and not that of his client.

Considerations favoring confidentially in lawyer-client relationships are many and serve several constitutional and policy concerns. In the
constitutional sphere, the privilege gives flesh to one of the most sacrosanct rights available to the accused, the right to counsel. If a client were
made to choose between legal representation without effective communication and disclosure and legal representation with all his secrets
revealed then he might be compelled, in some instances, to either opt to stay away from the judicial system or to lose the right to counsel. If the
price of disclosure is too high, or if it amounts to self incrimination, then the flow of information would be curtailed thereby rendering the right
practically nugatory. The threat this represents against another sacrosanct individual right, the right to be presumed innocent is at once self-
evident.

Encouraging full disclosure to a lawyer by one seeking legal services opens the door to a whole spectrum of legal options which would
otherwise be circumscribed by limited information engendered by a fear of disclosure. An effective lawyer-client relationship is largely
dependent upon the degree of confidence which exists between lawyer and client which in turn requires a situation which encourages a dynamic
and fruitful exchange and flow of information. It necessarily follows that in order to attain effective representation, the lawyer must invoke the
privilege not as a matter of option but as a matter of duty and professional responsibility.

The question now arises whether or not this duty may be asserted in refusing to disclose the name of petitioners' client(s) in the case at bar.
Under the facts and circumstances obtaining in the instant case, the answer must be in the affirmative.

As a matter of public policy, a client's identity should not be shrouded in mystery 30 Under this premise, the general rule in our jurisdiction as
well as in the United States is that a lawyer may not invoke the privilege and refuse to divulge the name or identity of this client. 31

The reasons advanced for the general rule are well established.

First, the court has a right to know that the client whose privileged information is sought to be protected is flesh and blood.

Second, the privilege begins to exist only after the attorney-client relationship has been established. The attorney-client privilege does not attach
until there is a client.

Third, the privilege generally pertains to the subject matter of the relationship.

Finally, due process considerations require that the opposing party should, as a general rule, know his adversary. "A party suing or sued is
entitled to know who his opponent is." 32 He cannot be obliged to grope in the dark against unknown forces. 33

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

1) Client identity is privileged where a strong probability exists that revealing the client's name would implicate that client in the very activity for
which he sought the lawyer's advice.

In Ex-Parte Enzor, 34 a state supreme court reversed a lower court order requiring a lawyer to divulge the name of her client on the ground that
the subject matter of the relationship was so closely related to the issue of the client's identity that the privilege actually attached to both. In
Enzor, the unidentified client, an election official, informed his attorney in confidence that he had been offered a bribe to violate election laws or
that he had accepted a bribe to that end. In her testimony, the attorney revealed that she had advised her client to count the votes correctly, but
averred that she could not remember whether her client had been, in fact, bribed. The lawyer was cited for contempt for her refusal to reveal his
client's identity before a grand jury. Reversing the lower court's contempt orders, the state supreme court held that under the circumstances of the
case, and under the exceptions described above, even the name of the client was privileged.

U .S. v. Hodge and Zweig,35 involved the same exception, i.e. that client identity is privileged in those instances where a strong probability
exists that the disclosure of the client's identity would implicate the client in the very criminal activity for which the lawyer's legal advice was
obtained.

The Hodge case involved federal grand jury proceedings inquiring into the activities of the "Sandino Gang," a gang involved in the illegal
importation of drugs in the United States. The respondents, law partners, represented key witnesses and suspects including the leader of the
gang, Joe Sandino.

In connection with a tax investigation in November of 1973, the IRS issued summons to Hodge and Zweig, requiring them to produce
documents and information regarding payment received by Sandino on behalf of any other person, and vice versa. The lawyers refused to
divulge the names. The Ninth Circuit of the United States Court of Appeals, upholding non-disclosure under the facts and circumstances of the
case, held:

A client's identity and the nature of that client's fee arrangements may be privileged where the person invoking the privilege can show that a
strong probability exists that disclosure of such information would implicate that client in the very criminal activity for which legal advice was
sought Baird v. Koerner, 279 F. 2d at 680. While in Baird Owe enunciated this rule as a matter of California law, the rule also reflects federal
law. Appellants contend that the Baird exception applies to this case.

The Baird exception is entirely consonant with the principal policy behind the attorney-client privilege. "In order to promote freedom of
consultation of legal advisors by clients, the apprehension of compelled disclosure from the legal advisors must be removed; hence, the law must
prohibit such disclosure except on the client's consent." 8 J. Wigmore, supra sec. 2291, at 545. In furtherance of this policy, the client's identity
and the nature of his fee arrangements are, in exceptional cases, protected as confidential communications. 36

2) Where disclosure would open the client to civil liability; his identity is privileged. For instance, the peculiar facts and circumstances of
Neugass v. Terminal Cab Corporation,37 prompted the New York Supreme Court to allow a lawyer's claim to the effect that he could not reveal
the name of his client because this would expose the latter to civil litigation.

In the said case, Neugass, the plaintiff, suffered injury when the taxicab she was riding, owned by respondent corporation, collided with a second
taxicab, whose owner was unknown. Plaintiff brought action both against defendant corporation and the owner of the second cab, identified in
the information only as John Doe. It turned out that when the attorney of defendant corporation appeared on preliminary examination, the fact
was somehow revealed that the lawyer came to know the name of the owner of the second cab when a man, a client of the insurance company,
prior to the institution of legal action, came to him and reported that he was involved in a car accident. It was apparent under the circumstances
that the man was the owner of the second cab. The state supreme court held that the reports were clearly made to the lawyer in his professional
capacity. The court said:

That his employment came about through the fact that the insurance company had hired him to defend its policyholders seems immaterial. The
attorney is such cases is clearly the attorney for the policyholder when the policyholder goes to him to report an occurrence contemplating that it
would be used in an action or claim against him. 38

xxx xxx xxx

All communications made by a client to his counsel, for the purpose of professional advice or assistance, are privileged, whether they relate to a
suit pending or contemplated, or to any other matter proper for such advice or aid; . . . And whenever the communication made, relates to a
matter so connected with the employment as attorney or counsel as to afford presumption that it was the ground of the address by the client, then
it is privileged from disclosure. . .

It appears . . . that the name and address of the owner of the second cab came to the attorney in this case as a confidential communication. His
client is not seeking to use the courts, and his address cannot be disclosed on that theory, nor is the present action pending against him as service
of the summons on him has not been effected. The objections on which the court reserved decision are sustained. 39

In the case of Matter of Shawmut Mining Company,40 the lawyer involved was required by a lower court to disclose whether he represented
certain clients in a certain transaction. The purpose of the court's request was to determine whether the unnamed persons as interested parties
were connected with the purchase of properties involved in the action. The lawyer refused and brought the question to the State Supreme Court.
Upholding the lawyer's refusal to divulge the names of his clients the court held:

If it can compel the witness to state, as directed by the order appealed from, that he represented certain persons in the purchase or sale of these
mines, it has made progress in establishing by such evidence their version of the litigation. As already suggested, such testimony by the witness
would compel him to disclose not only that he was attorney for certain people, but that, as the result of communications made to him in the
course of such employment as such attorney, he knew that they were interested in certain transactions. We feel sure that under such conditions no
case has ever gone to the length of compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature of
the transactions to which it related, when such information could be made the basis of a suit against his client. 41

3) Where the government's lawyers have no case against an attorney's client unless, by revealing the client's name, the said name would furnish
the only link that would form the chain of testimony necessary to convict an individual of a crime, the client's name is privileged.

In Baird vs. Korner,42 a lawyer was consulted by the accountants and the lawyer of certain undisclosed taxpayers regarding steps to be taken to
place the undisclosed taxpayers in a favorable position in case criminal charges were brought against them by the U.S. Internal Revenue Service
(IRS).

It appeared that the taxpayers' returns of previous years were probably incorrect and the taxes understated. The clients themselves were unsure
about whether or not they violated tax laws and sought advice from Baird on the hypothetical possibility that they had. No investigation was then
being undertaken by the IRS of the taxpayers. Subsequently, the attorney of the taxpayers delivered to Baird the sum of $12, 706.85, which had
been previously assessed as the tax due, and another amount of money representing his fee for the advice given. Baird then sent a check for
$12,706.85 to the IRS in Baltimore, Maryland, with a note explaining the payment, but without naming his clients. The IRS demanded that Baird
identify the lawyers, accountants, and other clients involved. Baird refused on the ground that he did not know their names, and declined to name
the attorney and accountants because this constituted privileged communication. A petition was filed for the enforcement of the IRS summons.
For Baird's repeated refusal to name his clients he was found guilty of civil contempt. The Ninth Circuit Court of Appeals held that, a lawyer
could not be forced to reveal the names of clients who employed him to pay sums of money to the government voluntarily in settlement of
undetermined income taxes, unsued on, and with no government audit or investigation into that client's income tax liability pending. The court
emphasized the exception that a client's name is privileged when so much has been revealed concerning the legal services rendered that the
disclosure of the client's identity exposes him to possible investigation and sanction by government agencies. The Court held:

The facts of the instant case bring it squarely within that exception to the general rule. Here money was received by the government, paid by
persons who thereby admitted they had not paid a sufficient amount in income taxes some one or more years in the past. The names of the clients
are useful to the government for but one purpose — to ascertain which taxpayers think they were delinquent, so that it may check the records for
that one year or several years. The voluntary nature of the payment indicates a belief by the taxpayers that more taxes or interest or penalties are
due than the sum previously paid, if any. It indicates a feeling of guilt for nonpayment of taxes, though whether it is criminal guilt is undisclosed.
But it may well be the link that could form the chain of testimony necessary to convict an individual of a federal crime. Certainly the payment
and the feeling of guilt are the reasons the attorney here involved was employed — to advise his clients what, under the circumstances, should be
done. 43

Apart from these principal exceptions, there exist other situations which could qualify as exceptions to the general rule.

For example, the content of any client communication to a lawyer lies within the privilege if it is relevant to the subject matter of the legal
problem on which the client seeks legal assistance. 44 Moreover, where the nature of the attorney-client relationship has been previously
disclosed and it is the identity which is intended to be confidential, the identity of the client has been held to be privileged, since such revelation
would otherwise result in disclosure of the entire transaction. 45

Summarizing these exceptions, information relating to the identity of a client may fall within the ambit of the privilege when the client's name
itself has an independent significance, such that disclosure would then reveal client confidences. 46

The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly reveal that the instant case falls under at least two
exceptions to the general rule. First, disclosure of the alleged client's name would lead to establish said client's connection with the very fact in
issue of the case, which is privileged information, because the privilege, as stated earlier, protects the subject matter or the substance (without
which there would be not attorney-client relationship).

The link between the alleged criminal offense and the legal advice or legal service sought was duly establishes in the case at bar, by no less than
the PCGG itself. The key lies in the three specific conditions laid down by the PCGG which constitutes petitioners' ticket to non-prosecution
should they accede thereto:

(a) the disclosure of the identity of its clients;

(b) submission of documents substantiating the lawyer-client relationship; and

(c) the submission of the deeds of assignment petitioners executed in favor of their clients covering their respective shareholdings.

From these conditions, particularly the third, we can readily deduce that the clients indeed consulted the petitioners, in their capacity as lawyers,
regarding the financial and corporate structure, framework and set-up of the corporations in question. In turn, petitioners gave their professional
advice in the form of, among others, the aforementioned deeds of assignment covering their client's shareholdings.

There is no question that the preparation of the aforestated documents was part and parcel of petitioners' legal service to their clients. More
important, it constituted an integral part of their duties as lawyers. Petitioners, therefore, have a legitimate fear that identifying their clients
would implicate them in the very activity for which legal advice had been sought, i.e., the alleged accumulation of ill-gotten wealth in the
aforementioned corporations.

Furthermore, under the third main exception, revelation of the client's name would obviously provide the necessary link for the prosecution to
build its case, where none otherwise exists. It is the link, in the words of Baird, "that would inevitably form the chain of testimony necessary to
convict the (client) of a . . . crime." 47

An important distinction must be made between a case where a client takes on the services of an attorney for illicit purposes, seeking advice
about how to go around the law for the purpose of committing illegal activities and a case where a client thinks he might have previously
committed something illegal and consults his attorney about it. The first case clearly does not fall within the privilege because the same cannot
be invoked for purposes illegal. The second case falls within the exception because whether or not the act for which the client sought advice
turns out to be illegal, his name cannot be used or disclosed if the disclosure leads to evidence, not yet in the hands of the prosecution, which
might lead to possible action against him.

These cases may be readily distinguished, because the privilege cannot be invoked or used as a shield for an illegal act, as in the first example;
while the prosecution may not have a case against the client in the second example and cannot use the attorney client relationship to build up a
case against the latter. The reason for the first rule is that it is not within the professional character of a lawyer to give advice on the commission
of a crime. 48 The reason for the second has been stated in the cases above discussed and are founded on the same policy grounds for which the
attorney-client privilege, in general, exists.

In Matter of Shawmut Mining Co., supra, the appellate court therein stated that "under such conditions no case has ever yet gone to the length of
compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it related,
when such information could be made the basis of a suit against his client." 49 "Communications made to an attorney in the course of any
personal employment, relating to the subject thereof, and which may be supposed to be drawn out in consequence of the relation in which the
parties stand to each other, are under the seal of confidence and entitled to protection as privileged communications."50 Where the
communicated information, which clearly falls within the privilege, would suggest possible criminal activity but there would be not much in the
information known to the prosecution which would sustain a charge except that revealing the name of the client would open up other privileged
information which would substantiate the prosecution's suspicions, then the client's identity is so inextricably linked to the subject matter itself
that it falls within the protection. The Baird exception, applicable to the instant case, is consonant with the principal policy behind the privilege,
i.e., that for the purpose of promoting freedom of consultation of legal advisors by clients, apprehension of compelled disclosure from attorneys
must be eliminated. This exception has likewise been sustained in In re Grand Jury Proceedings51 and Tillotson v. Boughner.52 What these
cases unanimously seek to avoid is the exploitation of the general rule in what may amount to a fishing expedition by the prosecution.

There are, after all, alternative source of information available to the prosecutor which do not depend on utilizing a defendant's counsel as a
convenient and readily available source of information in the building of a case against the latter. Compelling disclosure of the client's name in
circumstances such as the one which exists in the case at bench amounts to sanctioning fishing expeditions by lazy prosecutors and litigants
which we cannot and will not countenance. When the nature of the transaction would be revealed by disclosure of an attorney's retainer, such
retainer is obviously protected by the privilege. 53 It follows that petitioner attorneys in the instant case owe their client(s) a duty and an
obligation not to disclose the latter's identity which in turn requires them to invoke the privilege.

In fine, the crux of petitioners' objections ultimately hinges on their expectation that if the prosecution has a case against their clients, the latter's
case should be built upon evidence painstakingly gathered by them from their own sources and not from compelled testimony requiring them to
reveal the name of their clients, information which unavoidably reveals much about the nature of the transaction which may or may not be
illegal. The logical nexus between name and nature of transaction is so intimate in this case the it would be difficult to simply dissociate one
from the other. In this sense, the name is as much "communication" as information revealed directly about the transaction in question itself, a
communication which is clearly and distinctly privileged. A lawyer cannot reveal such communication without exposing himself to charges of
violating a principle which forms the bulwark of the entire attorney-client relationship.

The uberrimei fidei relationship between a lawyer and his client therefore imposes a strict liability for negligence on the former. The ethical
duties owing to the client, including confidentiality, loyalty, competence, diligence as well as the responsibility to keep clients informed and
protect their rights to make decisions have been zealously sustained. In Milbank, Tweed, Hadley and McCloy v. Boon,54 the US Second District
Court rejected the plea of the petitioner law firm that it breached its fiduciary duty to its client by helping the latter's former agent in closing a
deal for the agent's benefit only after its client hesitated in proceeding with the transaction, thus causing no harm to its client. The Court instead
ruled that breaches of a fiduciary relationship in any context comprise a special breed of cases that often loosen normally stringent requirements
of causation and damages, and found in favor of the client.

To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and Shipley P.A. v. Scheller55 requiring strict obligation of lawyers vis-a-
vis clients. In this case, a contingent fee lawyer was fired shortly before the end of completion of his work, and sought payment quantum meruit
of work done. The court, however, found that the lawyer was fired for cause after he sought to pressure his client into signing a new fee
agreement while settlement negotiations were at a critical stage. While the client found a new lawyer during the interregnum, events forced the
client to settle for less than what was originally offered. Reiterating the principle of fiduciary duty of lawyers to clients in Meinhard v. Salmon56
famously attributed to Justice Benjamin Cardozo that "Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of
behavior," the US Court found that the lawyer involved was fired for cause, thus deserved no attorney's fees at all.

The utmost zeal given by Courts to the protection of the lawyer-client confidentiality privilege and lawyer's loyalty to his client is evident in the
duration of the protection, which exists not only during the relationship, but extends even after the termination of the relationship. 57

Such are the unrelenting duties required by lawyers vis-a-vis their clients because the law, which the lawyers are sworn to uphold, in the words
of Oliver Wendell Holmes, 58 ". . . is an exacting goddess, demanding of her votaries in intellectual and moral discipline." The Court, no less, is
not prepared to accept respondents' position without denigrating the noble profession that is lawyering, so extolled by Justice Holmes in this
wise:

Every calling is great when greatly pursued. But what other gives such scope to realize the spontaneous energy of one's soul? In what other does
one plunge so deep in the stream of life — so share its passions its battles, its despair, its triumphs, both as witness and actor? . . . But that is not
all. What a subject is this in which we are united — this abstraction called the Law, wherein as in a magic mirror, we see reflected, not only in
our lives, but the lives of all men that have been. When I think on this majestic theme my eyes dazzle. If we are to speak of the law as our
mistress, we who are here know that she is a mistress only to be won with sustained and lonely passion — only to be won by straining all the
faculties by which man is likened to God.

We have no choice but to uphold petitioners' right not to reveal the identity of their clients under pain of the breach of fiduciary duty owing to
their clients, because the facts of the instant case clearly fall within recognized exceptions to the rule that the client's name is not privileged
information.

If we were to sustain respondent PCGG that the lawyer-client confidential privilege under the circumstances obtaining here does not cover the
identity of the client, then it would expose the lawyers themselves to possible litigation by their clients in view of the strict fiduciary
responsibility imposed on them in the exercise of their duties.

The complaint in Civil Case No. 0033 alleged that the defendants therein, including herein petitioners and Eduardo Cojuangco, Jr. conspired
with each other in setting up through the use of coconut levy funds the financial and corporate framework and structures that led to the
establishment of UCPB, UNICOM and others and that through insidious means and machinations, ACCRA, using its wholly-owned investment
arm, ACCRA Investment Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total capital
stock of UCPB as of 31 March 1987. The PCGG wanted to establish through the ACCRA lawyers that Mr. Cojuangco is their client and it was
Cojuangco who furnished all the monies to the subscription payment; hence, petitioners acted as dummies, nominees and/or agents by allowing
themselves, among others, to be used as instrument in accumulating ill-gotten wealth through government concessions, etc., which acts
constitute gross abuse of official position and authority, flagrant breach of public trust, unjust enrichment, violation of the Constitution and laws
of the Republic of the Philippines.
By compelling petitioners, not only to reveal the identity of their clients, but worse, to submit to the PCGG documents substantiating the client-
lawyer relationship, as well as deeds of assignment petitioners executed in favor of its clients covering their respective shareholdings, the PCGG
would exact from petitioners a link "that would inevitably form the chain of testimony necessary to convict the (client) of a crime."

III

In response to petitioners' last assignment of error, respondents alleged that the private respondent was dropped as party defendant not only
because of his admission that he acted merely as a nominee but also because of his undertaking to testify to such facts and circumstances "as the
interest of truth may require, which includes . . . the identity of the principal."59

First, as to the bare statement that private respondent merely acted as a lawyer and nominee, a statement made in his out-of-court settlement with
the PCGG, it is sufficient to state that petitioners have likewise made the same claim not merely out-of-court but also in the Answer to plaintiff's
Expanded Amended Complaint, signed by counsel, claiming that their acts were made in furtherance of "legitimate lawyering."60 Being
"similarly situated" in this regard, public respondents must show that there exist other conditions and circumstances which would warrant their
treating the private respondent differently from petitioners in the case at bench in order to evade a violation of the equal protection clause of the
Constitution.

To this end, public respondents contend that the primary consideration behind their decision to sustain the PCGG's dropping of private
respondent as a defendant was his promise to disclose the identities of the clients in question. However, respondents failed to show — and
absolute nothing exists in the records of the case at bar — that private respondent actually revealed the identity of his client(s) to the PCGG.
Since the undertaking happens to be the leitmotif of the entire arrangement between Mr. Roco and the PCGG, an undertaking which is so
material as to have justified PCGG's special treatment exempting the private respondent from prosecution, respondent Sandiganbayan should
have required proof of the undertaking more substantial than a "bare assertion" that private respondent did indeed comply with the undertaking.
Instead, as manifested by the PCGG, only three documents were submitted for the purpose, two of which were mere requests for re-investigation
and one simply disclosed certain clients which petitioners (ACCRA lawyers) were themselves willing to reveal. These were clients to whom
both petitioners and private respondent rendered legal services while all of them were partners at ACCRA, and were not the clients which the
PCGG wanted disclosed for the alleged questioned transactions.61

To justify the dropping of the private respondent from the case or the filing of the suit in the respondent court without him, therefore, the PCGG
should conclusively show that Mr. Roco was treated as species apart from the rest of the ACCRA lawyers on the basis of a classification which
made substantial distinctions based on real differences. No such substantial distinctions exist from the records of the case at bench, in violation
of the equal protection clause.

The equal protection clause is a guarantee which provides a wall of protection against uneven application of status and regulations. In the
broader sense, the guarantee operates against uneven application of legal norms so
that all persons under similar circumstances would be accorded the same treatment. 62 Those who fall within a particular class ought to be
treated alike not only as to privileges granted but also as to the liabilities imposed.

. . . What is required under this constitutional guarantee is the uniform operation of legal norms so that all persons under similar circumstances
would be accorded the same treatment both in the privileges conferred and the liabilities imposed. As was noted in a recent decision: "Favoritism
and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under
circumstances, which if not identical are analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be
treated in the same fashion, whatever restrictions cast on some in the group equally binding the rest.63

We find that the condition precedent required by the respondent PCGG of the petitioners for their exclusion as parties-defendants in PCGG Case
No. 33 violates the lawyer-client confidentiality privilege. The condition also constitutes a transgression by respondents Sandiganbayan and
PCGG of the equal protection clause of the Constitution.64 It is grossly unfair to exempt one similarly situated litigant from prosecution without
allowing the same exemption to the others. Moreover, the PCGG's demand not only touches upon the question of the identity of their clients but
also on documents related to the suspected transactions, not only in violation of the attorney-client privilege but also of the constitutional right
against self-incrimination. Whichever way one looks at it, this is a fishing expedition, a free ride at the expense of such rights.

An argument is advanced that the invocation by petitioners of the privilege of attorney-client confidentiality at this stage of the proceedings is
premature and that they should wait until they are called to testify and examine as witnesses as to matters learned in confidence before they can
raise their objections. But petitioners are not mere witnesses. They are co-principals in the case for recovery of alleged ill-gotten wealth. They
have made their position clear from the very beginning that they are not willing to testify and they cannot be compelled to testify in view of their
constitutional right against self-incrimination and of their fundamental legal right to maintain inviolate the privilege of attorney-client
confidentiality.

It is clear then that the case against petitioners should never be allowed to take its full course in the Sandiganbayan. Petitioners should not be
made to suffer the effects of further litigation when it is obvious that their inclusion in the complaint arose from a privileged attorney-client
relationship and as a means of coercing them to disclose the identities of their clients. To allow the case to continue with respect to them when
this Court could nip the problem in the bud at this early opportunity would be to sanction an unjust situation which we should not here
countenance. The case hangs as a real and palpable threat, a proverbial Sword of Damocles over petitioners' heads. It should not be allowed to
continue a day longer.

While we are aware of respondent PCGG's legal mandate to recover ill-gotten wealth, we will not sanction acts which violate the equal
protection guarantee and the right against self-incrimination and subvert the lawyer-client confidentiality privilege.
WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondent Sandiganbayan (First Division) promulgated on March 18,
1992 and May 21, 1992 are hereby ANNULLED and SET ASIDE. Respondent Sandiganbayan is further ordered to exclude petitioners Teodoro
D. Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayuduni as parties-
defendants in SB Civil Case No. 0033 entitled "Republic of the Philippines v. Eduardo Cojuangco, Jr., et al."

SO ORDERED.

G.R. No. 138231 February 21, 2002

GREGORIO R. CASTILLO, petitioner,
vs.
SANDIGANBAYAN and the REPUBLIC OF THE PHILIPPINES, respondents.

DECISION
BUENA, J.:

This is a petition for certiorari, seeking to annul the Resolutions dated November 24, 1998 and February 18, 1999 of the Sandiganbayan in Civil
Case No. 0014, which denied petitioner’s motion to dismiss the complaint as against him pursuant to the ruling of this Court in Regala vs.
Sandiganbayan, 262 SCRA 123.

On July 23, 1987, the Republic of the Philippines filed with the Sandiganbayan a complaint for reconveyance, reversion, accounting, restitution
and damages against several persons one of which is petitioner. The case was docketed as Civil Case No. 0014. The allegations pertinent to the
petitioner reads:

"10. Defendant GREGORIO R. CASTILLO acted as a dummy, nominee and/or agent of Defendants Ferdinand E. Marcos, Imelda R. Marcos,
Modesto Enriquez, Trinidad Diaz-Enriquez, Rebecco Panlilio, Erlinda Enriquez Panlilio and Leandro Enriquez in establishing Hotel properties
Inc. in order to acquire beneficial interest and control, and conceal ownership, of Silahis International Hotel. He may be served with summons
and other court processes at his last known address at 8th Floor Singapore Airlines Bldg., 138 H.V. de la Costa St., Salcedo Village, Makati,
Metro Manila.

"x x x xxx xxx

"x x x xxx xxx

"15. Defendant spouses Rebecco Panlilio and Erlinda Enriquez-Panlilio, spouses, Modesto Enriquez and Trinidad Diaz-Enriquez, spouses,
Leandro Enriquez, Guillermo Gastrock, Ernesto Abalos and Gregorio R. Castillo in unlawful concert with Defendants Ferdinand E. Marcos and
Imelda R. Marcos, taking undue advantage of their close relationship with the latter Defendant spouses, in order to enrich themselves at the
expense of Plaintiff, devised several schemes and strategems, as follows:"1

After petitioner moved for a bill of particulars, the Republic filed a Submission attaching a copy of its "Complaint (Expanded per Court-
Approved Plaintiff’s Manifestation/Motion dated December 8, 1987)" (hereafter the Expanded Complaint). The Republic expanded paragraph
15 (c) of its complaint to read as follows:

"(c) Acquired the controlling interest in the Silahis International Hotel, Inc. by the purchase from the Development Bank of the Philippines
(DBP) of seventy-one (71%) per cent of the capital stock of said Silahis International Hotel Inc. and assignment of DBP’s various receivable
from Silahis worth P187,641,502.76 with the active collaboration, knowledge and willing participation of its Vice-Chairman, Defendant Don M.
Ferry who signed all the documents pertaining to such sale and assignment, for the grossly undervalued amount of only P120 Million, to the
serious detriment of Plaintiff and the Filipino people. Defendant Gregorio R. Castillo signed all pertinent documents as attorney-in-fact of the
defendants Enriquezes and Panlilios."2

On February 29, 1988, petitioner filed his Answer including a counterclaim against the Republic. As an affirmative defense, petitioner alleged in
his Answer that:

"3. To the extent that it has been brought against defendant as ‘attorney-in-fact of the defendants Enriquezes and Panlilios’ who as such ‘signed
all pertinent documents’ for the latter, without any allegations of knowledge of or participation in the wrongful acts within which the other
defendants are charged, the complainant, insofar as defendant is concerned, has been brought against one who is not a real-party-interest."3

On October 24, 1992, petitioner died. Subsequently, a motion to dismiss was filed by his counsel on the ground that since the complaint is one
for recovery of money, debt or interest thereon, it does not survive the death of petitioner.

On February 19, 1993, the Sandiganbayan promulgated a Resolution denying petitioner’s motion to dismiss. It ruled that respondent’s cause of
action as against petitioner is not abated by the latter’s death, the case being not only one for recovery of money, debt or interest thereon, but one
for recovery of real and personal property and that the cause of action being inclusive of claim for damages for tortuous misconduct.

On October 15, 1996, petitioner, represented by his heirs, field another Motion to Dismiss on the ground that the Complaint against him is
violative of the lawyer-client confidentiality privilege and must be dismissed pursuant to the Supreme Court’s decision in Regala vs.
Sandiganbayan, promulgated on September 20, 1996.

The respondent Republic filed an Opposition to the Motion to Dismiss.

On November 26, 1998, the Sandiganbayan promulgated the herein assailed Resolution dated November 24, 1998 denying the motion to dismiss
on the ground that petitioner is being sued as principal defendant for being in conspiracy with other defendants in the commission of the acts
complained of. The pertinent portions of the said resolution read:

"In the instant case, the cause of action against herein defendant Castillo is clearly spelled out in paragraphs ‘9’ and ‘15’ of the Complaint, to wit:

‘9. Defendant GREGORIO R. CASTILLO acted as dummy, nominee and/or agent of Defendants Ferdinand E. Marcos, Imelda R. Marcos,
Modesto Enriquez, Trinidad Diaz-Enriquez, Rebecco Panlilio, Erlinda Enriquez Panlilio and Leandro Enriquez in establishing Hotel Properties
Inc. in order to acquire beneficial interest and control, and conceal ownership, of Silahis International Hotel. He may be served with summons
and other court processes at his last known address at 8th Floor Singapore Airlines Bldg., 138 H.V. de la Costa St., Salcedo Village, Makati,
Metro Manila.

‘x x x xxx xxx

‘x x x xxx xxx

"15. Defendant spouses Rebecco Panlilio and Erlinda Enriquez-Panlilio, spouses, Modesto Enriquez and Trinidad Diaz-Enriquez, spouses,
Leandro Enriquez, Guillermo Gastrock, Ernesto Abalos and Gregorio R. Castillo in unlawful concert with Defendants Ferdinand E. Marcos and
Imelda R. Marcos, taking undue advantage of their close relationship with the latter Defendant spouses, in order to enrich themselves at the
expense of Plaintiff, devised several schemes and strategems, as follows:’

"Thus, We subscribe to the plaintiff’s opposition that defendant Castillo is being sued as principal defendant for being in conspiracy with the
other defendants in the commission of the acts complained of.

"The lawyer-client confidentiality privilege invoked by defendant Castillo in seeking the dismissal of this case is a matter of defense and is
premature to be taken into consideration at this stage of the proceedings. In fact this is one of the issues in this case as defendant Castillo in
paragraph 3 of his Answer denied the allegations in paragraph 9 of the complaint claiming that he merely acted in his professional capacity as
counsel for the defendants Enriquezes and Panlilios.

"The fact that in PCGG’s expanded complaint it subsequently alleged with particularity that defendant Castillo’s only participation was that he
‘signed all pertinent documents as attorney-in-fact of defendant Enriquezes, ‘the same did not in any manner change the cause of action against
defendant Castillo but merely supplements the same.

"PREMISES CONSIDERED and for utter lack of merit, the instant motion to dismiss is hereby DENIED."4

Petitioner filed a motion for reconsideration but the same was likewise denied.

Hence, the present petition.

Petitioner submits that:

"Respondent court committed grave abuse of discretion in disregarding the ruling of this court in Regala v. Sandiganbayan, et al. and in refusing
to dismiss Civil Case No. 0014 as against petitioner."

Petitioner argues that the suit against him is violative of the lawyer-client confidentiality privilege and must be dismissed pursuant to this Court’s
decision in Regala vs. Sandiganbayan.

On the other hand, the respondent Republic contends that the ruling in Regala does not apply to the present case, because in said case, there was
a clear finding that the ACCRA lawyers were impleaded by the PCGG as co-defendants to force them to disclose the identity of their clients as
shown by the PCGG’s willingness to cut a deal with the ACCRA lawyers – the names of their clients in exchange for exclusion from the
complaint. In the present case, continues the respondent Republic, petitioner is being sued as principal defendant for being in conspiracy with the
other defendants in the commission of the act complained of, and he is not being required to name his clients.

Respondent Republic also posits that petitioner’s claim that he merely acted in his professional capacity as counsel with neither participation in
nor knowledge of the unlawful acts allegedly committed by his clients, is a mere allegation that has to be proven.

We find for the petitioner.

It is true that unlike in Regala, petitioner in the present case is not being required to name his clients. However, the case of Regala is still
applicable to the present case because the two cases are the same in more important aspects.

The fact of the lawyer-client relationship between petitioner and defendants Enriquezes and Panlilios was immediately raised by petitioner as
one of his affirmative defenses. In the same vein, in Regala the professional relationship was raised merely as a defense by defendant lawyers
and was not yet proved during the trial. This notwithstanding, this Court struck out the complaint against the lawyers.

The respondent Republic argued in its Comment that:

"Moreover, the rule of confidentiality under the lawyer-client relationship is not a valid ground to dismiss a complaint against a party. It is
merely a ground for disqualification of a witness (Section 24, Rule 130, Rules of Court) and may only be invoked at the appropriate time, such
as, when a lawyer is under compulsion to answer as witness, as when, having taken the witness stand, he is questioned on such confidential
communication or advice, or is being otherwise judicially coerced to produce, through subpoena duces tecum to otherwise, letters or other
documents containing the same privileged matter. But defendant is not being required to testify about or otherwise reveal any confidential
communication made by the client to him or his advice given thereon. What is clear from the complaint is that defendant is being sued as
principal defendant for being in conspiracy with the other defendants in the commission of the acts complained of.

"Besides, the attorney-client privileged communication does not apply if the confidence received by an attorney is for the purpose of advancing a
criminal or fraudulent purpose."5

This was the same argument raised by the Republic in the case of Regala. In overruling the Republic’s position, this Court ruled:

"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 objection. But petitioners are not mere witnesses.1âwphi1 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."6

The doctrine of adherence to judicial precedents or stare decisis is provided in Art. 8 of the Civil Code. The doctrine is enunciated thus:

"The doctrine of stare decisis enjoins adherence to judicial precedents. It requires courts in a country to follow the rule established in a decision
of the Supreme Court thereof. That decision becomes a judicial precedent to be followed in subsequent cases by all courts in the land. The
doctrine of stare decisis is based on the principle that once a question of law has been examined and decided, it should be deemed settled and
closed to further argument."7

WHEREFORE, the Resolutions of the Sandiganbayan dated November 24, 1998 and February 18, 1999 are hereby ANNULLED and SET
ASIDE. Respondent Sandiganbayan is further ordered to exclude petitioner Gregorio R. Castillo as party-defendant in SB Civil Case NO. 0014
entitled Republic of the Philippines vs. Modesto Enriquez, et al.

SO ORDERED.