Cherylette P.

Lingao PALE 3-S

January 6, 2012

Presidential Commission on Good Government vs. Sandiganbayan April 12, 2005 455 SCRA 526

Facts: General Bank and Trust Company was declared insolvent by the Central Bank and subjected it to liquidation. A public bidding followed, which was bought by the highest bidder, Lucio Tan. Thereafter, the government, represented by then Solicitor General, Estelito Mendoza, filed a petition with the trial court praying for the assistance and supervision of the court in GENBANK s liquidation docketed as Special Proceeding No. 107812. After the end of the Marcos administration, and the election of Corazon Aquino as president, Presidential Commision on Good Governance (PCGG) was formed to recover the alleged ill-gotten wealth of the Marcos family and his cronies. One of the first civil cases filed by the PCGG in the Sandiganbayan was a complaint for reversion, reconveyance, restitution, accounting and damages against respondents Tan et al. and the then First Couple, Ferdinand and Imelda Marcos together with several others.

By the time Civil Cases Nos. 0005 and 0096-0099 were filed, Estelito Mendoza has returned to his private life together into the private practice of law. He was engaged as counsel for respondents Tan, et al. and thereafter filed petitions for certiorari, prohibition and injunction to annul the writs of sequestration issued by the PCGG. This led to the filing of several motions by the PCGG to disqualify Mendoza from the cases he was representing for the respondents, alleging that as former Solicitor General, he actively intervened in the liquidation proceedings of GENBANK (currently Allied Bank) that was acquired by the same group of Tan et al. The allegation of the government in its motions stresses that as former Solicitor General, and acting as counsel for Central Bank, he advised the Central Bank s officials on how to go about with the procedure of the liquidation. In doing so, PCGG says that he violated Rule 6.03 of the Code of Professional Responsibility, prohibiting former government lawyers from accepting engagement or employment in connection with any matter in which he had intervened while in said service. The Sandinbayan, through a resolution, denied the motion to disqualify which led to the filing of a petition for certiorari and prohibition before the Supreme Court. Issues: Whether or not the definitions of matter and intervene as interpreted by the PCGG are the same as the definitions contemplated by the Code of Professional Responsibility And, Whether or not Estelito Mendoza violated Rule 6.03 of the Code of Professional Responsibility in his engagement with the civil cases involving Tan, et al.

Held:

The issues were resolved both in the negative. The Court resolved the case by going through the history of the adoption of the Code of the Professional Conduct from the American System and stating the rationale behind Rule 6.03. The evil sought to be prevented is that a government lawyer s actions be influenced by the temptation to take action on behalf of the government client that latter could be to the advantage of parties who might later become private practice clients. In the adoption of the said rule from Canon 36 paragraph 2 of the American Bar Association s Canons of Professional Ethics, the Integrated Bar of the Philippines replaced the phrase investigated and passed upon with the word intervened . This led to the explanation behind the phrasing of the canon in the American Legal System where members of the ABA addressed the issues of revolving door , adverse-interest conflicts , and congruent-interest conflicts . ABA further defined the following terms: Revolving Door: the process by which lawyers and others temporarily enter the government service from private life then leave it for large fees in private practice, where they can exploit information, contacts and influence gathered while in government service. Adverse-interest conflicts: exists when a former government lawyer represents a client in private practice in which the matter is substantially related to a matter

that the lawyer dealt with while employed by the government and the interests of the current and former are adverse Congruent-interest conflicts: where former government lawyers are prohibited from representing a client in private practice even if the interests of the former government client and new client are entirely parallel. It was through the definitions that the Court ruled that Mendoza s case does not involve an adverse-interest conflict because he has not shown any adverse interest when he acted as Solicitor General in the Special Proceeding case and as counsel for the Civil cases pending before the Sandiganbayan. As to the violation of Rule 6.03 of the Code of Professional Responsibility, the Court shed light through the definitions of matter and intervention based on the Formal Opinion 342 of the American Bar Association. Matter is any discrete, isolatable act as well as identifiable transaction or conduct involving a particular situation and specific party and not merely an act of drafting, enforcing, or interpreting government or agency procedures, regulations or laws, or briefing abstract principles of law. Intervention was classified in two definitions. The first includes the participation in a proceeding even if the intervention is irrelevant or has no effect or little influence as implied from the definition of intervene which is to occur, fall, or come in between points of time or events . While the second includes an act of a person who has the power to influence the subject proceeding which is rooted from the definition of intervene to come in

or between by way of hindrance or modification and that interference which may affect the interests of others. The Court said that it is beyond doubt that matter or the act of Mendoza as Solicitor General in the liquidation case, advising the Central Bank on how to proceed with it, is not the matter contemplated by Rule 6.03 of the Code of Professional Responsibility. The ABA Formal Opinion No. 342 stressed that the matter which will not disqualify a lawyer would be the mere drafting, enforcing, or interpreting government or agency procedures, regulations or laws, or briefing abstract principles of law. The matter where Mendoza got himself involved with was in acting as counsel for the Central Bank; he informed them of the proper procedure provided by law to liquidate GENBANK through the filing of the necessary petition in the RTC of Manila. Mendoza is not privy to the decision of the Central Bank to liquidate GENBANK nor was he involved in the sale of GENBANK to presently Allied Bank. Furthermore, the matter of liquidation involved in the Special Proceeding case is entirely different from the matter of sequestration involved in the Civil Cases. Moreover, Rule 6.03 of the Code of Professional Responsibility cannot apply to Mendoza because his alleged intervention as Solicitor General is an intervention on a matter different from the sequestration of stocks as ill-gotten wealth in the Civil Case. The Court opines that the second interpretation of intervention is more fitting to the intention of the law based on its historical background.

There can be no intervention when a government lawyer acts only in drafting, enforcing, or interpreting government or agency procedures, regulations or laws. It has to be that the lawyer participated personally and substantially in a matter related to his office. To this, the PCGG failed to substantiate that Mendoza played a significant and substantial intervention in the Special Proceeding case. Acting as Solicitor General, he had to sign the petition as an initiatory pleading for the Central Bank. The assistance extended to the Central Bank by Mendoza was only that of an agent of the government more than a court litigator acting in behalf of the government. It is still the Central Bank that has the sole authority and jurisdiction to promulgate the rules and regulations in the liquidation of insolvent banks. For these reasons, the Court denied the petitions of the PCGG in disqualifying Estelito Mendoza as counsel for respondents Tan, et al.